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   Home Page > Executive Branch > Code of Federal Regulations > Electronic Code
   of Federal Regulations

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                e-CFR Data is current as of October 1, 2007

   Title 47: Telecommunication

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PART 32—UNIFORM SYSTEM OF ACCOUNTS FOR TELECOMMUNICATIONS COMPANIES
   ___________________________________

   Section Contents
   
                             Subpart A—Preface

   § 32.1   Background.
   § 32.2   Basis of the accounts.
   § 32.3   Authority.
   § 32.4   Communications Act.
   
                       Subpart B—General Instructions

   § 32.11   Classification of companies.
   § 32.12   Records.
   § 32.13   Accounts—general.
   § 32.14   Regulated accounts.
   § 32.15   [Reserved]
   § 32.16   Changes in accounting standards.
   § 32.17   Interpretation of accounts.
   § 32.18   Waivers.
   § 32.19   Address for reports and correspondence.
   § 32.20   Numbering convention.
   § 32.21   Sequence of accounts.
   § 32.22   Comprehensive interperiod tax allocation.
   § 32.23   Nonregulated activities.
   § 32.24   Compensated absences.
   § 32.25   Unusual items and contingent liabilities.
   § 32.26   Materiality.
   § 32.27   Transactions with affiliates.
   
             Subpart C—Instructions for Balance Sheet Accounts

   § 32.101   Structure of the balance sheet accounts.
   § 32.102   Nonregulated investments.
   § 32.103   Balance sheet accounts for other than regulated-fixed assets to
   be maintained.
   § 32.1120   Cash and equivalents.
   § 32.1170   Receivables.
   § 32.1171   Allowance for doubtful accounts.
   § 32.1191   Accounts receivable allowance—other.
   § 32.1220   Inventories.
   § 32.1280   Prepayments.
   § 32.1350   Other current assets.
   § 32.1406   Nonregulated investments.
   § 32.1410   Other noncurrent assets.
   § 32.1438   Deferred maintenance and retirements.
   § 32.1500   Other jurisdictional assets—net.
   § 32.2000   Instructions for telecommunications plant accounts.
   § 32.2001   Telecommunications plant in service.
   § 32.2002   Property held for future telecommunications use.
   § 32.2003   Telecommunications plant under construction.
   § 32.2005   Telecommunications plant adjustment.
   § 32.2006   Nonoperating plant.
   § 32.2007   Goodwill.
   § 32.2110   Land and support assets.
   § 32.2111   Land.
   § 32.2112   Motor vehicles.
   § 32.2113   Aircraft.
   § 32.2114   Tools and other work equipment.
   § 32.2121   Buildings.
   § 32.2122   Furniture.
   § 32.2123   Office equipment.
   § 32.2124   General purpose computers.
   § 32.2210   Central office—switching.
   § 32.2211   Non-digital switching.
   § 32.2212   Digital electronic switching.
   § 32.2220   Operator systems.
   § 32.2230   Central office—transmission.
   § 32.2231   Radio systems.
   § 32.2232   Circuit equipment.
   § 32.2310   Information origination/termination.
   § 32.2311   Station apparatus.
   § 32.2321   Customer premises wiring.
   § 32.2341   Large private branch exchanges.
   § 32.2351   Public telephone terminal equipment.
   § 32.2362   Other terminal equipment.
   § 32.2410   Cable and wire facilities.
   § 32.2411   Poles.
   § 32.2421   Aerial cable.
   § 32.2422   Underground cable.
   § 32.2423   Buried cable.
   § 32.2424   Submarine & deep sea cable.
   § 32.2426   Intrabuilding network cable.
   § 32.2431   Aerial wire.
   § 32.2441   Conduit systems.
   § 32.2680   Amortizable tangible assets.
   § 32.2681   Capital leases.
   § 32.2682   Leasehold improvements.
   § 32.2690   Intangibles.
   § 32.3000   Instructions  for  balance sheet accounts—Depreciation and
   amortization.
   § 32.3100   Accumulated depreciation.
   § 32.3200   Accumulated depreciation—held for future telecommunications use.
   § 32.3300   Accumulated depreciation—nonoperating.
   § 32.3400   Accumulated amortization—tangible.
   § 32.3410   Accumulated amortization—capitalized leases.
   § 32.3999   Instructions  for  balance  sheet accounts—liabilities and
   stockholders' equity.
   § 32.4000   Current accounts and notes payable.
   § 32.4040   Customers' deposits.
   § 32.4070   Income taxes—accrued.
   § 32.4080   Other taxes—accrued.
   § 32.4100   Net current deferred operating income taxes.
   § 32.4110   Net current deferred nonoperating income taxes.
   § 32.4130   Other current liabilities.
   § 32.4200   Long term debt and funded debt.
   § 32.4300   Other long-term liabilities and deferred credits.
   § 32.4320   Unamortized operating investment tax credits—net.
   § 32.4330   Unamortized nonoperating investment tax credits—net.
   § 32.4340   Net noncurrent deferred operating income taxes.
   § 32.4341   Net deferred tax liability adjustments.
   § 32.4350   Net noncurrent deferred nonoperating income taxes.
   § 32.4361   Deferred tax regulatory adjustments—net.
   § 32.4370   Other jurisdictional liabilities and deferred credits—net.
   § 32.4510   Capital stock.
   § 32.4520   Additional paid-in capital.
   § 32.4530   Treasury stock.
   § 32.4540   Other capital.
   § 32.4550   Retained earnings.
   
                Subpart D—Instructions For Revenue Accounts

   § 32.4999   General.
   § 32.5000   Basic local service revenue.
   § 32.5001   Basic area revenue.
   § 32.5002   Optional extended area revenue.
   § 32.5003   Cellular mobile revenue.
   § 32.5040   Private line revenue.
   § 32.5060   Other basic area revenue.
   § 32.5081   End user revenue.
   § 32.5082   Switched access revenue.
   § 32.5083   Special access revenue.
   § 32.5100   Long distance message revenue.
   § 32.5200   Miscellaneous revenue.
   § 32.5230   Directory revenue.
   § 32.5280   Nonregulated operating revenue.
   § 32.5300   Uncollectible revenue.
   
                Subpart E—Instructions for Expense Accounts

   § 32.5999   General.
   § 32.6110   Network support expenses.
   § 32.6112   Motor vehicle expense.
   § 32.6113   Aircraft expense.
   § 32.6114   Tools and other work equipment expense.
   § 32.6120   General support expenses.
   § 32.6121   Land and building expense.
   § 32.6122   Furniture and artworks expense.
   § 32.6123   Office equipment expense.
   § 32.6124   General purpose computers expense.
   § 32.6210   Central office switching expenses.
   § 32.6211   Non-digital switching expense.
   § 32.6212   Digital electronic switching expense.
   § 32.6220   Operator systems expense.
   § 32.6230   Central office transmission expense.
   § 32.6231   Radio systems expense.
   § 32.6232   Circuit equipment expense.
   § 32.6310   Information origination/termination expenses.
   § 32.6311   Station apparatus expense.
   § 32.6341   Large private branch exchange expense.
   § 32.6351   Public telephone terminal equipment expense.
   § 32.6362   Other terminal equipment expense.
   § 32.6410   Cable and wire facilities expenses.
   § 32.6411   Poles expense.
   § 32.6421   Aerial cable expense.
   § 32.6422   Underground cable expense.
   § 32.6423   Buried cable expense.
   § 32.6424   Submarine and deep sea cable expense.
   § 32.6426   Intrabuilding network cable expense.
   § 32.6431   Aerial wire expense.
   § 32.6441   Conduit systems expense.
   § 32.6510   Other property, plant and equipment expenses.
   § 32.6511   Property held for future telecommunications use expense.
   § 32.6512   Provisioning expense.
   § 32.6530   Network operations expense.
   § 32.6531   Power expense.
   § 32.6532   Network administration expense.
   § 32.6533   Testing expense.
   § 32.6534   Plant operations administration expense.
   § 32.6535   Engineering expense.
   § 32.6540   Access expense.
   § 32.6560   Depreciation and amortization expenses.
   § 32.6561   Depreciation expense—telecommunications plant in service.
   § 32.6562   Depreciation expense—property held for future telecommunications
   use.
   § 32.6563   Amortization expense—tangible.
   § 32.6564   Amortization expense—intangible.
   § 32.6565   Amortization expense—other.
   § 32.6610   Marketing.
   § 32.6611   Product management and sales.
   § 32.6613   Product advertising.
   § 32.6620   Services.
   § 32.6621   Call completion services.
   § 32.6622   Number services.
   § 32.6623   Customer services.
   § 32.6720   General and administrative.
   § 32.6790   Provision for uncollectible notes receivable.
   
              Subpart F—Instructions For Other Income Accounts

   § 32.6999   General.
   § 32.7100   Other operating income and expenses.
   § 32.7199   Content of accounts.
   § 32.7200   Operating taxes.
   § 32.7210   Operating investment tax credits—net.
   § 32.7220   Operating Federal income taxes.
   § 32.7230   Operating state and local income taxes.
   § 32.7240   Operating other taxes.
   § 32.7250   Provision for deferred operating income taxes—net.
   § 32.7300   Nonoperating income and expense.
   § 32.7400   Nonoperating taxes.
   § 32.7500   Interest and related items.
   § 32.7600   Extraordinary items.
   § 32.7899   Content of accounts.
   § 32.7910   Income effect of jurisdictional ratemaking differences—net.
   § 32.7990   Nonregulated net income.
   
                             Subpart G—Glossary

   § 32.9000   Glossary of terms.
   ___________________________________

   Authority:   47 U.S.C. 154(i), 154(j) and 220 as amended, unless otherwise
   noted.

   Source:    51 FR 43499 , Dec. 2, 1986, unless otherwise noted.

Subpart A—Preface

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§ 32.1   Background.

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   The revised Uniform System of Accounts (USOA) is a historical financial
   accounting system which reports the results of operational and financial
   events in a manner which enables both management and regulators to assess
   these results within a specified accounting period. The USOA also provides
   the financial community and others with financial performance results. In
   order for an accounting system to fulfill these purposes, it must exhibit
   consistency and stability in financial reporting (including the results
   published for regulatory purposes). Accordingly, the USOA has been designed
   to reflect stable, recurring financial data based to the extent regulatory
   considerations permit upon the consistency of the well established body of
   accounting  theories  and principles commonly referred to as generally
   accepted accounting principles.

§ 32.2   Basis of the accounts.

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   (a) The financial accounts of a company are used to record, in monetary
   terms, the basic transactions which occur. Certain natural groupings of
   these transactions are called (in different contexts) transaction cycles,
   business processes, functions or activities. The concept, however, is the
   same in each case; i.e., the natural groupings represent what happens within
   the company on a consistent and continuing basis. This repetitive nature of
   the  natural groupings, over long periods of time, lends an element of
   stability to the financial account structure.

   (b) Within the telecommunications industry companies, certain recurring
   functions (natural groupings) do take place in the course of providing
   products and services to customers. These accounts reflect, to the extent
   feasible, those functions. For example, the primary bases of the accounts
   containing the investment in telecommunications plant are the functions
   performed by the assets. In addition, because of the anticipated effects of
   future innovations, the telecommunications plant accounts are intended to
   permit technological distinctions. Similarly, the primary bases of plant
   operations, customer operations and corporate operations expense accounts
   are the functions performed by individuals. The revenue accounts, on the
   other  hand,  reflect  a market perspective of natural groupings based
   primarily upon the products and services purchased by customers.

   (c)  In the course of developing the bases for this account structure,
   several other alternatives were explored. It was, for example, determined
   that,  because  of  the variety and continual changing of various cost
   allocation  mechanisms, the financial accounts of a company should not
   reflect an a priori allocation of revenues, investments or expenses to
   products or services, jurisdictions or organizational structures. (Note also
   §32.14 (c) and (d) of subpart B.) It was also determined that costs (in the
   case of assets) should not be recorded based solely upon physical attributes
   such as location, description or size.

   (d) Care has been taken in this account structure to avoid confusing a
   function with an organizational responsibility, particularly as it relates
   to the expense accounts. Whereas in the past, specific organizations may
   have  performed  specific  functions,  the future environment with its
   increasing mechanization and other changes will result in entirely new or
   restructured  organizations.  Thus,  any  relationships  drawn between
   organizations and accounts would become increasingly meaningless with the
   passage of time.

   (e)  These  accounts,  then,  are intended to reflect a functional and
   technological  view of the telecommunications industry. This view will
   provide a stable and consistent foundation for the recording of financial
   data.

   (f) The financial data contained in the accounts, together with the detailed
   information contained in the underlying financial and other subsidiary
   records required by this Commission, will provide the information necessary
   to  support  separations,  cost  of  service  and management reporting
   requirements. The basic account structure has been designed to remain stable
   as reporting requirements change.

§ 32.3   Authority.

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   This  Uniform System of Accounts has been prepared under the following
   authority: Section 4 of the Communications Act of 1934, as amended, 47
   U.S.C. section 154 (1984); sections 219, 220 of the Communications Act of
   1934, as amended, 47 U.S.C. sections 219, 220, (1984).

§ 32.4   Communications Act.

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   Attention is directed to the following extract from section 220 of the
   Communications Act of 1934, 47 U.S.C. 220 (1984):

   (e) Any person who shall willfully make any false entry in the accounts of
   any book of accounts or in any record or memoranda kept by any such carrier,
   or who shall willfully destroy, mutilate, alter, or by any other means or
   device  falsify  any  such account, record, or memoranda, or who shall
   willfully neglect or fail to make full, true, and correct entries in such
   accounts, records, or memoranda of all facts and transactions appertaining
   to the business of the carrier, shall be deemed guilty of a misdemeanor, and
   shall be subject, upon conviction, to a fine of not less than $1,000 nor
   more than $5,000 or imprisonment for a term of not less than one year nor
   more than three years, or both such fine and imprisonment: Provided, that
   the Commission may in its discretion issue orders specifying such operating,
   accounting or financial papers, records, books, blanks, or documents which
   may, after a reasonable time, be destroyed, and prescribing the length of
   time such books, papers, or documents shall be preserved.

   For regulations governing the periods for which records are to be retained,
   see part 42, Preservation of Records of Communications Common Carriers, of
   this chapter which relates to preservation of records.

Subpart B—General Instructions

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§ 32.11   Classification of companies.

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   (a) For purposes of this section, the term “company” or “companies” means
   incumbent local exchange carrier(s) as defined in section 251(h) of the
   Communications Act, and any other carriers that the Commission designates by
   Order. Incumbent local exchange carriers' successor or assign companies, as
   defined in section 251(h)(1)(B)(ii) of the Communications Act, that are
   found to be non-dominant by the Commission, will not be subject to this
   Uniform System of Accounts.

   (b) For accounting purposes, companies are divided into classes as follows:

   (1)   Class   A.  Companies  having  annual  revenues  from  regulated
   telecommunications operations that are equal to or above the indexed revenue
   threshold.

   (2)   Class   B.  Companies  having  annual  revenues  from  regulated
   telecommunications  operations  that are less than the indexed revenue
   threshold.

   (c) Class A companies, except mid-sized incumbent local exchange carriers,
   as  defined by §32.9000, shall keep all the accounts of this system of
   accounts which are applicable to their affairs and are designated as Class A
   accounts.  Class  A companies, which include mid-sized incumbent local
   exchange carriers, shall keep Basic Property Records in compliance with the
   requirements of §§32.2000(e) and (f).

   (d) Class B companies and mid-sized incumbent local exchange carriers, as
   defined by §32.9000, shall keep all accounts of this system of accounts
   which  are  applicable  to their affairs and are designated as Class B
   accounts. Mid-sized incumbent local exchange carriers shall also maintain
   subsidiary record categories necessary to provide the pole attachment data
   currently provided in the Class A accounts. Class B companies shall keep
   Continuing  Property  Records  in  compliance with the requirements of
   §§32.2000(e)(7)(i)(A) and 32.2000(f).

   (e) Class B companies and mid-sized incumbent local exchange carriers, as
   defined by §32.9000 of this part, that desire more detailed accounting may
   adopt the accounts prescribed for Class A companies upon the submission of a
   written notification to the Commission.

   (f) The classification of a company shall be determined at the start of the
   calendar year following the first time its annual operating revenue from
   regulated telecommunications operations equals, exceeds, or falls below the
   indexed revenue threshold.

   [ 67 FR 5679 , Feb. 6, 2002, as amended at  69 FR 53648 , Sept. 2, 2004]

§ 32.12   Records.

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   (a)  The  company's financial records shall be kept in accordance with
   generally accepted accounting principles to the extent permitted by this
   system of accounts.

   (b)  The  company's  financial  records  shall be kept with sufficient
   particularity to show fully the facts pertaining to all entries in these
   accounts. The detail records shall be filed in such manner as to be readily
   accessible for examination by representatives of this Commission.

   (c) The Commission shall require a company to maintain financial and other
   subsidiary records in such a manner that specific information, of a type not
   warranting  disclosure  as  an  account or subaccount, will be readily
   available. When this occurs, or where the full information is not otherwise
   recorded in the general books, the subsidiary records shall be maintained in
   sufficient detail to facilitate the reporting of the required specific
   information. The subsidiary records, in which the full details are shown,
   shall  be  sufficiently  referenced to permit ready identification and
   examination by representatives of this Commission.

§ 32.13   Accounts—general.

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   (a)  As a general rule, all accounts kept by reporting companies shall
   conform in numbers and titles to those prescribed herein. However, reporting
   companies may use different numbers for internal purposes when separate
   accounts (or subaccounts) maintained are consistent with the title and
   content of accounts and subaccounts prescribed in this system.

   (1) A company may subdivide any of the accounts prescribed. The titles of
   all such subaccounts shall refer by number or title to the controlling
   account.

   (2) A company may establish temporary or experimental accounts without prior
   notice to the Commission.

   (b) Exercise of the preceding options shall be allowed only if the integrity
   of the prescribed accounts is not impaired.

   (c) As of the date a company becomes subject to the system of accounts, the
   company is authorized to make any such subdivisions, reclassifications or
   consolidations  of  existing  balances  as  are  necessary to meet the
   requirements of this system of accounts.

   (d) Nothing contained in this part shall prohibit or excuse any company,
   receiver, or operating trustee of any carrier from subdividing the accounts
   hereby prescribed for the purpose of:

   (1)  Complying with the requirements of the state commission(s) having
   jurisdiction; or

   (2) Securing the information required in the prescribed reports to such
   commission(s).

   (e) Where the use of subsidiary records is considered necessary in order to
   secure the information required in reports to any state commission, the
   company shall incorporate the following controls into their accounting
   system with respect to such subsidiary records:

   (1) Subsidiary records shall be reconciled to the company's general ledger
   or books of original entry, as appropriate.

   (2) The company shall adequately document the accounting procedures related
   to subsidiary records.

   (3) The subsidiary records shall be maintained at an adequate level of
   detail to satisfy state regulators.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  65 FR 16334 , Mar. 28, 2000;  67 FR 5679 , Feb. 6, 2002]

§ 32.14   Regulated accounts.

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   (a) In the context of this part, the regulated accounts shall be interpreted
   to include the investments, revenues and expenses associated with those
   telecommunications  products  and  services to which the tariff filing
   requirements contained in Title II of the Communications Act of 1934, as
   amended, are applied, except as may be otherwise provided by the Commission.
   Regulated telecommunications products and services are thereby fully subject
   to  the  accounting  requirements  as  specified  in  Title  II of the
   Communications  Act of 1934, as amended, and as detailed in subparts A
   through F of this part of the Commission's Rules and Regulations.

   (b)  In  addition  to  those amounts considered to be regulated by the
   provisions  of paragraph (a) of this section, those telecommunications
   products and services to which the tariff filing requirements of the several
   state jurisdictions are applied shall be accounted for as regulated, except
   where  such  treatment  is  proscribed  or otherwise excluded from the
   requirements  pertaining  to regulated telecommunications products and
   services by this Commission.

   (c) In the application of detailed accounting requirements contained in this
   part, when a regulated activity involves the common or joint use of assets
   and resources in the provision of regulated and nonregulated products and
   services, companies shall account for these activities within the accounts
   prescribed in this system for telephone company operations. Assets and
   expenses shall be subdivided in subsidiary records among amounts solely
   assignable  to  nonregulated  activities, amounts solely assignable to
   regulated  activities, and amounts related to assets used and expenses
   incurred jointly or in common, which will be allocated between regulated and
   nonregulated  activities.  Companies  shall submit reports identifying
   regulated and nonregulated amounts in the manner and at the times prescribed
   by this Commission. Nonregulated revenue items not qualifying for incidental
   treatment, as provided in §32.4999(l), shall be recorded in Account 5280,
   Nonregulated operating revenue.

   (d) Other income items which are incidental to the provision of regulated
   products and services shall be accounted for as regulated activities.

   (e) All costs and revenues related to the offering of regulated products and
   services  which  result  from  arrangements for joint participation or
   apportionment between two or more telephone companies (e.g., joint operating
   agreements,  settlement  agreements, cost-pooling agreements) shall be
   recorded within the detailed accounts. Under joint operating agreements, the
   creditor  will initially charge the entire expenses to the appropriate
   primary accounts. The proportion of such expenses borne by the debtor shall
   be  credited  by the creditor and charged by the debtor to the account
   initially  charged. Any allowances for return on property used will be
   accounted for as provided in Account 5200, Miscellaneous revenue.

   (f) All items of nonregulated revenue, investment and expense that are not
   properly  includible in the detailed, regulated accounts prescribed in
   subparts A through F of this part, as determined by paragraphs (a) through
   (e) of this section shall be accounted for and included in reports to this
   Commission as specified in §32.23 of this subpart.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  52 FR 6560 , Mar. 4, 1987;  53 FR 49321 , Dec. 7, 1988;  67 FR 5679 , Feb. 6, 2002]

§ 32.15   [Reserved]

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§ 32.16   Changes in accounting standards.

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   (a)  The company's records and accounts shall be adjusted to apply new
   accounting standards prescribed by the Financial Accounting Standards Board
   or successor authoritative accounting standard-setting groups, in a manner
   consistent with generally accepted accounting principles. The change in an
   accounting standard will automatically take effect 90 days after the company
   informs this Commission of its intention to follow the new standard, unless
   the Commission notifies the company to the contrary. Any change adopted
   shall be disclosed in annual reports required by §43.21(f) of this chapter
   in the year of adoption.

   (b) The changes in accounting standards which this Commission approves will
   not necessarily be binding on the ratemaking practices of the various state
   commissions.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  64 FR 50007 , Sept. 15, 1999;  67 FR 5679 , Feb. 6, 2002]

§ 32.17   Interpretation of accounts.

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   To the end that uniform accounting shall be maintained within the prescribed
   system,  questions involving significant matters which are not clearly
   provided for shall be submitted to the Chief, Wireline Competition Bureau,
   for  explanation, interpretation, or resolution. Questions and answers
   thereto with respect to this system of accounts will be maintained by the
   Wireline Competition Bureau.

   [ 67 FR 13225 , Mar. 21, 2002]

§ 32.18   Waivers.

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   A waiver from any provision of this system of accounts shall be made by the
   Federal  Communications Commission upon its own initiative or upon the
   submission of written request therefor from any telecommunications company,
   or group of telecommunications companies, provided that such a waiver is in
   the public interest and each request for waiver expressly demonstrates that:
   existing peculiarities or unusual circumstances warrant a departure from a
   prescribed  procedure or technique; a specifically defined alternative
   procedure or technique will result in a substantially equivalent or more
   accurate portrayal of operating results or financial condition, consistent
   with the principles embodied in the provisions of this system of accounts;
   and the application of such alternative procedure will maintain or improve
   uniformity in substantive results as among telecommunications companies.

§ 32.19   Address for reports and correspondence.

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   Reports,  statements,  and  correspondence  submitted  to  the Federal
   Communications Commission in accordance with or relating to instructions and
   requirements contained herein shall be addressed to the Wireless Competition
   Bureau, Federal Communications Commission, Washington, DC 20554.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 13225 , Mar. 21, 2002]

§ 32.20   Numbering convention.

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   (a) The number “32” (appearing to the left of the first decimal point)
   indicates the part number.

   (b) The numbers immediately following to the right of the decimal point
   indicate, respectively, the section or account. All Part 32 Account numbers
   contain 4 digits to-the-right-of the decimal point. 

   (c) Cross references to accounts are made by citing the account numbers to
   the  right  of  the  decimal point; e.g., Account 2232 rather than the
   corresponding complete part 32 reference number 32.2232.

§ 32.21   Sequence of accounts.

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   The order in which the accounts are presented in this system of accounts is
   not to be considered as necessarily indicative of the order in which they
   will be scheduled at all times in reports to this Commission.

§ 32.22   Comprehensive interperiod tax allocation.

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   (a) Companies shall apply interperiod tax allocation (tax normalization) to
   all book/tax temporary differences which would be considered material for
   published financial report purposes. Furthermore, companies shall also apply
   interperiod  tax allocation if any item or group of similar items when
   aggregated would yield debit or credit entries which exceed or would exceed
   5 percent of the gross deferred income tax expense debits or credits during
   any calendar year over the life of the temporary difference. The tax effects
   of book/tax temporary differences shall be normalized and the deferrals
   shall be included in the following accounts:

   4100, Net Current Deferred Operating Income Taxes;

   4110, Net Current Deferred Nonoperating Income Taxes;

   4340, Net Noncurrent Deferred Operating Income Taxes;

   4350, Net Noncurrent Deferred Nonoperating Income Taxes.

   In lieu of the accounting prescribed herein, any company shall treat the
   increase or reduction in current income taxes payable resulting from the use
   of flow through accounting in prior years as an increase or reduction in
   current tax expense.

   (b)  Supporting  documentation shall be maintained so as to separately
   identify  the  amount of deferred taxes which arise from the use of an
   accelerated method of depreciation.

   (c) Subsidiary records shall be used to reduce the deferred tax assets
   contained in the accounts specified in paragraph (a) of this section when it
   is likely that some portion or all of the deferred tax asset will not be
   realized. The amount recorded in the subsidiary record should be sufficient
   to  reduce  the  deferred tax asset to the amount that is likely to be
   realized.

   (d) The records supporting the activity in the deferred income tax accounts
   shall be maintained in sufficient detail to identify the nature of the
   specific temporary differences giving rise to both the debits and credits to
   the individual accounts.

   (e) Any company that uses accelerated depreciation (or recognizes taxable
   income or losses upon the retirement of property) for income tax purposes
   shall normalize the tax differentials occasioned thereby as indicated in
   paragraphs (e)(1) and (e)(2) of this section.

   (1) With respect to the retirement of property the book/tax difference
   between  (i) the recognition of proceeds as income and the accrual for
   salvage  value  and  (ii)  the book and tax capital recovery, shall be
   normalized.

   (2) Records shall be maintained so as to show the deferred tax amounts by
   vintage year separately for each class or subclass of eligible depreciable
   telephone plant for which an accelerated method of depreciation has been
   used for income tax purposes. When property is transferred to nonregulated
   activities, the associated deferred income taxes and unamortized investment
   tax credits shall also be identified and transferred to the appropriate
   nonregulated accounts.

   (f) The tax differentials to be normalized as specified in this section
   shall also encompass the additional effect of state and local income tax
   changes on Federal income taxes produced by the provision for deferred state
   and local income taxes for book/tax temporary differences related to such
   income taxes.

   (g)  Companies  that  receive  the  tax  benefits from the filing of a
   consolidated income tax return by the parent company, (pursuant to closing
   agreements with the Internal Revenue Service, effective January 1, 1966)
   representing the deferred income taxes from the elimination of intercompany
   profits for income tax purposes on sales of regulated equipment, may credit
   such  deferred taxes directly to the plant account which contains such
   intercompany  profit  rather than crediting such deferred taxes to the
   applicable accounts in paragraph (a) of this section. If the deferred income
   taxes are recorded as a reduction of the appropriate plant accounts, such
   reduction shall be treated as reducing the original cost of the plant and
   accounted for as such.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  59 FR 9418 , Feb. 28, 1994]

§ 32.23   Nonregulated activities.

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   (a) This section describes the accounting treatment of activities classified
   for  accounting  purposes  as “nonregulated.” Preemptively deregulated
   activities and activities (other than incidental activities) never subject
   to   regulation   will   be  classified  for  accounting  purposes  as
   “nonregulated.” Activities that qualify for incidental treatment under the
   policies of this Commission will be classified for accounting purposes as
   regulated activities. Activities that have been deregulated by a state will
   be classified for accounting purposes as regulated activities. Activities
   that have been deregulated at the interstate level, but not preemptively
   deregulated,  will  be classified for accounting purposes as regulated
   activities  until  such time as this Commission decides otherwise. The
   treatment of nonregulated activities shall differ depending on the extent of
   the common or joint use of assets and resources in the provision of both
   regulated and nonregulated products and services.

   (b) When a nonregulated activity does not involve the joint or common use of
   assets and resources in the provision of both regulated and nonregulated
   products and services, carriers shall account for these activities on a
   separate set of books consistent with instructions set forth in §§32.1406
   and 32.7990. Transfers of assets, and sales of products and services between
   the regulated activity and a nonregulated activity for which a separate set
   of books is maintained, shall be accounted for in accordance with the rules
   presented in §32.27, Transactions with Affiliates. In the separate set of
   books, carriers may establish whatever detail they deem appropriate beyond
   what is necessary to provide this Commission with the information required
   in §§32.1406 and 32.7990.

   (c) When a nonregulated activity does involve the joint or common use of
   assets and resources in the provision of regulated and nonregulated products
   and services, carriers shall account for these activities within accounts
   prescribed in this system for telephone company operations. Assets and
   expenses shall be subdivided in subsidiary records among amounts solely
   assignable  to  nonregulated  activities, amounts solely assignable to
   regulated activities, and amounts related to assets and expenses incurred
   jointly  or  in  common, which will be allocated between regulated and
   nonregulated activities. Carriers shall submit reports identifying regulated
   and nonregulated amounts in the manner and at the times prescribed by this
   Commission.  Nonregulated  revenue items not qualifying for incidental
   treatment as provided in §32.4999(l) of this part, shall be recorded in
   separate  subsidiary  record  categories of Account 5280, Nonregulated
   operating revenue. Amounts assigned or allocated to regulated products or
   services shall be subject to part 36 of this chapter.

   [ 52 FR 6560 , Mar. 4, 1987, as amended at  53 FR 49322 , Dec. 7, 1988;  59 FR 46930 , Sept. 13, 1994;  64 FR 50007 , Sept. 15, 1999]

§ 32.24   Compensated absences.

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   (a) Companies shall record a liability and charge the appropriate expense
   accounts for compensated absences (vacations, sick leave, etc.) in the year
   in which these benefits are earned by employees.

   (b) With respect to the liability that exists for compensated absences which
   is not yet recorded on the books as of the effective date of this part, the
   liability shall be recorded in Account 4130. Other current liabilities, with
   a corresponding entry to Account 1438, Deferred maintenance, retirements and
   other  deferred  charges. This deferred charge shall be amortized on a
   straight-line basis over a period of ten years.

   (c) Records shall be maintained so as to show that no more than ten percent
   of the deferred charge is being amortized each year.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5679 , Feb. 6, 2002]

§ 32.25   Unusual items and contingent liabilities.

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   Extraordinary items, prior period adjustments, and contingent liabilities
   may be recorded in the company's books of account without prior Commission
   approval.

   [ 65 FR 16334 , Mar. 28, 2000]

§ 32.26   Materiality.

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   Companies shall follow this system of accounts in recording all financial
   and statistical data irrespective of an individual item's materiality under
   GAAP, unless a waiver has been granted under the provisions of §32.18 of
   this subpart to do otherwise.

§ 32.27   Transactions with affiliates.

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   (a) Unless otherwise approved by the Chief, Wireline Competition Bureau,
   transactions with affiliates involving asset transfers into or out of the
   regulated  accounts  shall be recorded by the carrier in its regulated
   accounts as provided in paragraphs (b) through (f) of this section.

   (b) Assets sold or transferred between a carrier and its affiliate pursuant
   to a tariff, including a tariff filed with a state commission, shall be
   recorded  in  the  appropriate  revenue accounts at the tariffed rate.
   Non-tariffed assets sold or transferred between a carrier and its affiliate
   that qualify for prevailing price valuation, as defined in paragraph (d) of
   this section, shall be recorded at the prevailing price. For all other
   assets sold by or transferred from a carrier to its affiliate, the assets
   shall be recorded at no less than the higher of fair market value and net
   book cost. For all other assets sold by or transferred to a carrier from its
   affiliate, the assets shall be recorded at no more than the lower of fair
   market value and net book cost.

   (1) Floor. When assets are sold by or transferred from a carrier to an
   affiliate, the higher of fair market value and net book cost establishes a
   floor, below which the transaction cannot be recorded. Carriers may record
   the transaction at an amount equal to or greater than the floor, so long as
   that  action complies with the Communications Act of 1934, as amended,
   Commission rules and orders, and is not otherwise anti-competitive.

   (2) Ceiling. When assets are purchased from or transferred from an affiliate
   to a carrier, the lower of fair market value and net book cost establishes a
   ceiling, above which the transaction cannot be recorded. Carriers may record
   the transaction at an amount equal to or less than the ceiling, so long as
   that  action complies with the Communications Act of 1934, as amended,
   Commission rules and orders, and is not otherwise anti-competitive.

   (3) Threshold. For purposes of this section carriers are required to make a
   good faith determination of fair market value for an asset when the total
   aggregate annual value of the asset(s) reaches or exceeds $500,000, per
   affiliate. When a carrier reaches or exceeds the $500,000 threshold for a
   particular asset for the first time, the carrier must perform the market
   valuation and value the transaction on a going-forward basis in accordance
   with the affiliate transactions rules on a going-forward basis. When the
   total  aggregate annual value of the asset(s) does not reach or exceed
   $500,000, the asset(s) shall be recorded at net book cost.

   (c) Services provided between a carrier and its affiliate pursuant to a
   tariff, including a tariff filed with a state commission, shall be recorded
   in the appropriate revenue accounts at the tariffed rate. Non-tariffed
   services  provided  between  a  carrier  and its affiliate pursuant to
   publicly-filed  agreements submitted to a state commission pursuant to
   section 252(e) of the Communications Act of 1934 or statements of generally
   available terms pursuant to section 252(f) shall be recorded using the
   charges  appearing  in  such  publicly-filed agreements or statements.
   Non-tariffed services provided between a carrier and its affiliate that
   qualify for prevailing price valuation, as defined in paragraph (d) of this
   section, shall be recorded at the prevailing price. For all other services
   sold by or transferred from a carrier to its affiliate, the services shall
   be  recorded at no less than the higher of fair market value and fully
   distributed cost. For all other services sold by or transferred to a carrier
   from its affiliate, the services shall be recorded at no more than the lower
   of fair market value and fully distributed cost.

   (1) Floor. When services are sold by or transferred from a carrier to an
   affiliate,  the higher of fair market value and fully distributed cost
   establishes  a  floor, below which the transaction cannot be recorded.
   Carriers may record the transaction at an amount equal to or greater than
   the floor, so long as that action complies with the Communications Act of
   1934,  as  amended,  Commission rules and orders, and is not otherwise
   anti-competitive.

   (2)  Ceiling.  When services are purchased from or transferred from an
   affiliate to a carrier, the lower of fair market value and fully distributed
   cost establishes a ceiling, above which the transaction cannot be recorded.
   Carriers may record the transaction at an amount equal to or less than the
   ceiling, so long as that action complies with the Communications Act of
   1934,  as  amended,  Commission rules and orders, and is not otherwise
   anti-competitive.

   (3) Threshold. For purposes of this section, carriers are required to make a
   good faith determination of fair market value for a service when the total
   aggregate annual value of that service reaches or exceeds $500,000, per
   affiliate. When a carrier reaches or exceeds the $500,000 threshold for a
   particular service for the first time, the carrier must perform the market
   valuation  and  value the transaction in accordance with the affiliate
   transactions rules on a going-forward basis. All services received by a
   carrier from its affiliate(s) that exist solely to provide services to
   members  of  the carrier's corporate family shall be recorded at fully
   distributed cost.

   (d) In order to qualify for prevailing price valuation in paragraphs (b) and
   (c) of this section, sales of a particular asset or service to third parties
   must encompass greater than 25 percent of the total quantity of such product
   or service sold by an entity. Carriers shall apply this 25 percent threshold
   on  an  asset-by-asset  and service-by-service basis, rather than on a
   product-line or service-line basis. In the case of transactions for assets
   and services subject to section 272, a BOC may record such transactions at
   prevailing price regardless of whether the 25 percent threshold has been
   satisfied.

   (e) Income taxes shall be allocated among the regulated activities of the
   carrier, its nonregulated divisions, and members of an affiliated group.
   Under circumstances in which income taxes are determined on a consolidated
   basis by the carrier and other members of the affiliated group, the income
   tax expense to be recorded by the carrier shall be the same as would result
   if determined for the carrier separately for all time periods, except that
   the tax effect of carry-back and carry-forward operating losses, investment
   tax credits, or other tax credits generated by operations of the carrier
   shall be recorded by the carrier during the period in which applied in
   settlement of the taxes otherwise attributable to any member, or combination
   of members, of the affiliated group.

   (f) Companies that employ average schedules in lieu of actual costs are
   exempt from the provisions of this section. For other organizations, the
   principles set forth in this section shall apply equally to corporations,
   proprietorships, partnerships and other forms of business organizations.

   [ 67 FR 5679 , Feb. 6, 2002, as amended at  69 FR 53648 , Sept. 2, 2004]

Subpart C—Instructions for Balance Sheet Accounts

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§ 32.101   Structure of the balance sheet accounts.

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   The Balance Sheet accounts shall be maintained as follows:

   (a)  Account  1120,  Cash and equivalents, through Account 1500, Other
   jurisdictional assets—net, shall include assets other than regulated-fixed
   assets.

   (b) Account 2001, Telecommunications plant in service, through Account 2007,
   Goodwill, shall include the regulated-fixed assets.

   (c) Account 3100, Accumulated depreciation through Account 3410, Accumulated
   amortization—capitalized leases, shall include the asset reserves except
   that reserves related to certain asset accounts will be included in the
   asset account. (See §§32.2005, 32.2682 and 32.2690.)

   (d) Account 4000, Current accounts and notes payable, through Account 4550,
   Retained earnings, shall include all liabilities and stockholders equity.

   [ 67 FR 5680 , Feb. 6, 2002]

§ 32.102   Nonregulated investments.

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   Nonregulated  investments shall include the investment in nonregulated
   activities that are conducted through the same legal entity as the telephone
   company operations, but do not involve the joint or common use of assets or
   resources in the provision of both regulated and nonregulated products and
   services. See §§32.14 and 32.23.

   [ 52 FR 6561 , Mar. 4, 1987]

§ 32.103   Balance sheet accounts for other than regulated-fixed assets to be
maintained.

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   Balance sheet accounts to be maintained by Class A and Class B telephone
   companies for other than regulated-fixed assets are indicated as follows:

   Balance Sheet Accounts
   Account title Class A
   account Class B
   account
   Current assets
   Cash and equivalents 1120 1120
   Receivables 1170 1170
   Allowance for doubtful accounts 1171 1171
   Supplies:
   Material and supplies 1220 1220
   Prepayments 1280 1280
   Other current assets 1350 1350
   Noncurrent assets
   Investments:
   Nonregulated investments 1406 1406
   Other noncurrent assets 1410 1410
   Deferred charges:
   Deferred maintenance, retirements and other deferred charges 1438 1438
   Other:
   Other jurisdictional assets-net 1500 1500

   [ 67 FR 5680 , Feb. 6, 2002]

§ 32.1120   Cash and equivalents.

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   (a) This account shall include the amount of current funds available for use
   on demand in the hands of financial officers and agents, deposited in banks
   or other financial institutions and also funds in transit for which agents
   have received credit.

   (b) This account shall include the amount of cash on special deposit, other
   than in sinking and other special funds provided for elsewhere, to pay
   dividends, interest, and other debts, when such payments are due one year or
   less from the date of deposit; the amount of cash deposited to insure the
   performance of contracts to be performed within one year from date of the
   deposit;  and other cash deposits of a special nature not provided for
   elsewhere. This account shall include the amount of cash deposited with
   trustees to be held until mortgaged property sold, destroyed, or otherwise
   disposed  of  is replaced, and also cash realized from the sale of the
   company's securities and deposited with trustees to be held until invested
   in physical property of the company or for disbursement when the purposes
   for which the securities were sold are accomplished.

   (c) Cash on special deposit to be held for more than one year from the date
   of deposit shall be included in Account 1410, Other noncurrent assets.

   (d) This account shall include the amount of cash advanced to officers,
   agents, employees, and others as petty cash or working funds from which
   expenditures are to be made and accounted for.

   (e) This account shall include the cost of current securities acquired for
   the purpose of temporarily investing cash, such as time drafts receivable
   and time loans, bankers' acceptances, United States Treasury certificates,
   marketable  securities,  and  other similar investments of a temporary
   character.

   (f) Accumulated changes in the net unrealized losses of current marketable
   equity securities shall be included in the determination of net income in
   the period in which they occur in Account 7300, Other Nonoperating Income
   and Expense.

   (g) Subsidiary record categories shall be maintained in order that the
   entity may separately report the amounts of temporary investments that
   relate to affiliates and nonaffiliates. Such subsidiary record categories
   shall be reported as required by part 43 of this chapter.

   [ 67 FR 5681 , Feb. 6, 2002]

§ 32.1170   Receivables.

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   (a) This account shall include all amounts due from customers for services
   rendered  or  billed and from agents and collectors authorized to make
   collections from customers. This account shall also include all amounts due
   from customers or agents for products sold. This account shall be kept in
   such manner as will enable the company to make the following analysis:

   (1) Amounts due from customers who are receiving telecommunications service.

   (2) Amounts due from customers who are not receiving service and whose
   accounts are in process of collection.

   (b) Collections in excess of amounts charged to this account may be credited
   to and carried in this account until applied against charges for services
   rendered or until refunded.

   (c) Cost of demand or time notes, bills and drafts receivable, or other
   similar evidences (except interest coupons) of money receivable on demand or
   within a time not exceeding one year from date of issue.

   (d) Amount of interest accrued to the date of the balance sheet on bonds,
   notes, and other commercial paper owned, on loans made, and the amount of
   dividends receivable on stocks owned.

   (e) This account shall not include dividends or other returns on securities
   issued or assumed by the company and held by or for it, whether pledged as
   collateral, or held in its treasury, in special deposits, or in sinking and
   other funds.

   (f) Dividends received and receivable from affiliated companies accounted
   for on the equity method shall be included in Account 1410, Other noncurrent
   assets, as a reduction of the carrying value of the investment.

   (g) This account shall include all amounts currently due, and not provided
   for  in  (a)  through  (g)  of  this section such as those for traffic
   settlements, divisions of revenue, material and supplies, matured rents, and
   interest receivable under monthly settlements on short-term loans, advances,
   and open accounts. If any of these items are not to be paid currently, they
   shall be transferred to Account 1410, Other noncurrent assets.

   (h) Subsidiary record categories shall be maintained in order that the
   entity may separately report the amounts contained herein that relate to
   affiliates and nonaffiliates. Such subsidiary record categories shall be
   reported as required by part 43 of this chapter.

   [ 67 FR 5681 , Feb. 6, 2002]

§ 32.1171   Allowance for doubtful accounts.

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   (a) This account shall be credited with amounts charged to Accounts 5300,
   Uncollectible  revenue,  and  6790,  Provision for uncollectible notes
   receivable  to  provide  for uncollectible amounts related to accounts
   receivable and notes receivable included in Account 1170, Receivables. There
   shall also be credited to this account amounts collected which previously
   had been written off through charges to this account and credits to Account
   1170. There shall be charged to this account any amounts covered thereby
   which have been found to be impracticable of collection.

   (b) If no such allowance is maintained, uncollectible amounts shall be
   charged directly to Account 5300, Uncollectible revenue or directly to
   Account 6790, Provision for uncollectible notes receivable, as appropriate.

   (c) Subsidiary record categories shall be maintained in order that the
   entity may separately report the amounts contained herein that relate to
   affiliates and nonaffiliates. Such subsidiary record categories shall be
   reported as required by part 43 of this chapter.

   [ 67 FR 5682 , Feb. 6, 2002]

§ 32.1191   Accounts receivable allowance—other.

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   (a) This account shall be credited with amounts charged to Account 5302,
   Uncollectible Revenue—Other to provide for uncollectible amounts included in
   Account 1190, Other Accounts Receivable. There shall also be credited to
   this account amounts collected which previously had been written off through
   charges to this account and credits to Account 1190. There shall be charged
   to this account any amounts covered thereby which have been found to be
   impracticable of collection.

   (b) If no such allowance is maintained, uncollectible amounts shall be
   charged directly to Account 5302, Uncollectible Revenue—Other.

   (c) Subsidiary record categories shall be maintained in order that the
   entity may separately report the amounts contained herein that relate to
   affiliates and nonaffiliates. Such subsidiary record categories shall be
   reported as required by part 43 of this Commission's Rules and Regulations.

§ 32.1220   Inventories.

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   (a) This account shall include the cost of materials and supplies held in
   stock and inventories of goods held for resale or lease. The investment in
   inventories shall be maintained in the following subaccounts:

   1220.1 Material and supplies

   1220.2 Property held for sale or lease

   (b)  These  subaccounts shall not include items which are related to a
   nonregulated activity unless that activity involves joint or common use of
   assets and resources in the provision of regulated and nonregulated products
   and services.

   (c) 1220.1 Material and supplies. This subaccount shall include cost of
   material and supplies held in stock including plant supplies, motor vehicles
   supplies, tools, fuel, other supplies and material and articles of the
   company  in  process  of  manufacture  for  supply  stock.  (Note also
   §32.2000(c)(2)(iii) of this subpart.)

   (d) Transportation charges and sales and use taxes, so far as practicable,
   shall be included as a part of the cost of the particular material to which
   they relate. Transportation and sales and use taxes which are not included
   as part of the cost of particular material shall be equitably apportioned
   among the detail accounts to which material is charged.

   (e) So far as practicable, cash and other discount on material shall be
   deducted in determining cost of the particular material to which they relate
   or credited to the account to which the material is charged. When such
   deduction is not practicable, discounts shall be equitably apportioned among
   the detail accounts to which material is charged.

   (f) Material recovered in connection with construction, maintenance or
   retirement of property shall be charged to this account as follows:

   (1) Reusable items that, when installed or in service, were retirement units
   shall be included in this account at the original cost, estimated if not
   known. (Note also §32.2000(d)(3) of this subpart.)

   (2)  Reusable minor items that, when installed or in service, were not
   retirement units shall be included in this account at current prices new.

   (3)  The  cost  of repairing reusable material shall be charged to the
   appropriate account in the Plant Specific Operations Expense accounts.

   (4) Scrap and nonusable material included in this account shall be carried
   at the estimated amount which will be received therefor. The difference
   between the amounts realized for scrap and nonusable material sold and the
   amounts at which it is carried in this account, so far as practicable, shall
   be adjusted in the accounts credited when the material was taken up in this
   account.

   (g) Interest paid on material bills, the payments of which are delayed,
   shall be charged to Account 7500, Interest and related items.

   (h) Inventories of material and supplies shall be taken periodically or
   frequently enough for reporting purposes, as appropriate, in accordance with
   generally accepted accounting principles. The adjustments to this account
   shall be charged or credited to Account 6512, Provisioning expense.

   (i) 1220.2  Property held for sale or lease. This subaccount shall include
   the cost of all items purchased for resale or lease. The cost shall include
   applicable transportation charges, sales and use taxes, and cash and other
   purchase discounts. Inventory shortage and overage shall be charged and
   credited, respectively, to Account 5280, Nonregulated operating revenue.

   [ 52 FR 39534 , Oct. 22, 1987, as amended at  53 FR 49322 , Dec. 7, 1988;  67 FR 5682 , Feb. 6, 2002]

§ 32.1280   Prepayments.

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   This account shall include:

   (a) The amounts of rents paid in advance of the period in which they are
   chargeable to income, except amounts chargeable to telecommunications plant
   under construction and minor amounts which may be charged directly to the
   final accounts. As the term expires for which the rents are paid, this
   account shall be credited monthly and the appropriate account charged.

   (b)  The  balance  of  all  taxes,  other  than  amounts chargeable to
   telecommunication plant under construction and minor amounts which may be
   charged to the final accounts, paid in advance and which are chargeable to
   income within one year. As the term expires for which the taxes are paid,
   this account shall be credited monthly and the appropriate account charged.

   (c) The amount of insurance premiums paid in advance of the period in which
   they   are   chargeable  to  income,  except  premiums  chargeable  to
   telecommunications plant under construction and minor amounts which may be
   charged directly to the final accounts. As the term expires for which the
   premiums  are  paid,  this  account  shall be credited monthly and the
   appropriate account charged.

   (d) The cost of preparing, printing, binding, and delivering directories and
   the cost of soliciting advertisements for directories, except minor amounts
   which  may be charged directly to Account 6622, Number services. These
   prepaid directory expenses shall be cleared to Account 6622 by monthly
   charges representing that portion of the expenses applicable to each month.

   (e) Other prepayments not included in paragraphs (a) through (d) of this
   section except for minor amounts which may be charged directly to the final
   accounts. As the term expires for which the payments apply, this account
   shall be credited monthly and the appropriate account charged.

   [ 67 FR 5682 , Feb. 6, 2002, as amended at  69 FR 53648 , Sept. 2, 2004]

§ 32.1350   Other current assets.

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   This account shall include the amount of all current assets which are not
   includable in Accounts 1120 through 1280.

   [ 67 FR 5682 , Feb. 6, 2002]

§ 32.1406   Nonregulated investments.

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   This  account  shall  include the carrier's investment in nonregulated
   activities  accounted  for  in  a separate set of books as provided in
   §32.23(b).

   [ 52 FR 6561 , Mar. 4, 1987;  52 FR 39535 , Oct. 22, 1987, as amended as  67 FR 5682 , Feb. 6, 2002]

§ 32.1410   Other noncurrent assets.

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   (a)  This  account shall include the acquisition cost of the company's
   investment in equity or other securities issued or assumed by affiliated
   companies, including securities held in special funds (sinking funds). The
   carrying value of the investment (securities) accounted for on the equity
   method shall be adjusted to recognize the company's share of the earnings or
   losses and dividends received or receivable of the affiliated company from
   the date of acquisition. (Note also Account 1170, Receivables, and Account
   7300, Nonoperating income and expense.)

   (b)  This  account shall include the acquisition cost of the Company's
   investment in securities issued or assumed by nonaffiliated companies and
   individuals, and also its investment advances to such parties and special
   deposits of cash for more than one year from date of deposit.

   (c) Declines in value of investments, including those accounted for under
   the  cost  method, shall be charged to Account 4540, Other capital, if
   temporary and as a current period loss if permanent. Detail records shall be
   maintained to reflect unrealized losses for each investment.

   (d) This account shall also include advances represented by book accounts
   only with respect to which it is agreed or intended that they shall be
   either settled by issuance of capital stock or debt; or shall not be subject
   to current cost settlement.

   (e)  Amounts due from affiliated and nonaffiliated companies which are
   subject  to  current  settlement  shall  be  included in Account 1170,
   Receivables.

   (f)  This  account shall include the total unamortized balance of debt
   issuance expense for all classes of outstanding long-term debt. Amounts
   included in this account shall be amortized monthly and charged to account
   7500, Interest and related items.

   (g) Debt Issuance expense includes all expenses in connection with the
   issuance and sale of evidence of debt, such as fees for drafting mortgages
   and trust deeds; fees and taxes for issuing or recording evidences of debt;
   costs of engraving and printing bonds, certificates of indebtedness, and
   other commercial paper; fees paid trustees; specific costs of obtaining
   governmental authority; fees for legal services; fees and commissions paid
   underwriters,  brokers,  and salesmen; fees and expenses of listing on
   exchanges, and other like costs. A subsidiary record shall be kept of each
   issue outstanding.

   (h) This account shall include the amount of cash and other assets which are
   held by trustees or by the company's treasurer in a distinct fund, for the
   purpose of redeeming outstanding obligations. Interest or other income
   arising from funds carried in this account shall generally be charged to
   this account. A subsidiary record shall be kept for each sinking fund which
   shall designate the obligation in support of which the fund was created.

   (i) This account shall include the amount of all noncurrent assets which are
   not includable in paragraphs (a) through (h) of this section.

   (j) A subsidiary record shall be kept identifying separately common stocks,
   preferred stocks, long-term debt, advances to affiliates, and investment
   advances.  A  subsidiary record shall also be kept identifying special
   deposits of cash for more than one year from the date of deposit. Further,
   the company's record shall identify the securities pledged as collateral for
   any  of  the company's long-term debt or short-term loans or to secure
   performance of contracts.

   (k) Subsidiary record categories shall be maintained in order that the
   entity may separately report the amounts contained herein that relate to the
   equity method and the cost method. Such subsidiary record categories shall
   be reported as required by part 43 of this chapter.

   [ 67 FR 5682 , Feb. 6, 2002]

§ 32.1438   Deferred maintenance and retirements.

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   (a) This account shall include such items as:

   (1) The unprovided-for loss in service value of telecommunications plant for
   extraordinary nonrecurring retirement not considered in depreciation and the
   cost of extensive replacements of plant normally chargeable to the current
   period Plant Specific Operations Expense accounts. These charges shall be
   included  in  this  account  only upon direction or approval from this
   Commission. However, the company's application to this Commission for such
   approval shall give full particulars concerning the property retired, the
   extensive replacements, the amount chargeable to operating expenses and the
   period over which in its judgment the amount of such charges should be
   distributed.

   (2) Unaudited amounts and other debit balances in suspense that cannot be
   cleared  and disposed of until additional information is received; the
   amount, pending determination of loss, of funds on deposit with banks which
   have failed; revenue, expense, and income items held in suspense; amounts
   paid for options pending final disposition.

   (3)  Cost of preliminary surveys, plans, investigation, etc., made for
   construction projects under contemplation. If the projects are carried out,
   the  preliminary  costs  shall  be  included  in the cost of the plant
   constructed. If the projects are abandoned, the preliminary costs shall be
   charged to Account 7300, Nonoperating income and expense.

   (4) Cost of evaluations, inventories, and appraisals taken in connection
   with the acquisition or sale of property. If the property is subsequently
   acquired, the preliminary costs shall be accounted for as a part of the cost
   of acquisition, or if it is sold, such costs shall be deducted from the sale
   price  in  accounting for the property sold. If purchases or sales are
   abandoned, the preliminary costs included herein (including options paid, if
   any) shall be charged to Account 7300.

   (b) Charges provided for in paragraph (a) of this section shall be included
   in  this account only upon direction or approval from this Commission.
   However, the company's application to this Commission for such approval
   shall give full particulars concerning the property retired, the extensive
   replacements, the amount chargeable to operating expenses and the period
   over which in its judgment the amount of such charges should be distributed.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5683 , Feb. 6, 2002]

§ 32.1500   Other jurisdictional assets—net.

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   This account shall include the cumulative impact on assets of jurisdictional
   ratemaking practices which vary from those of this Commission. All entries
   recorded in this account shall be recorded net of any applicable income tax
   effects and shall be supported by subsidiary records where necessary as
   provided for in §32.13(e) of subpart B.

§ 32.2000   Instructions for telecommunications plant accounts.

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   (a) Purpose of telecommunications plant accounts. (1) The telecommunications
   plant accounts (2001 to 2007 inclusive) are designed to show the investment
   in the company's tangible and intangible telecommunications plant which
   ordinarily has a service life of more than one year, including such plant
   whether  used by the company or others in providing telecommunications
   service.

   (2) The telecommunications plant accounts shall not include the cost or
   other  value  of  telecommunications plant contributed to the company.
   Contributions in the form of money or its equivalent toward the construction
   of telecommunications plant shall be credited to the accounts charged with
   the cost of such construction. Amounts of non-recurring reimbursements based
   on  the cost of plant or equipment furnished in rendering service to a
   customer shall be credited to the accounts charged with the cost of the
   plant or equipment. Amounts received for construction which are ultimately
   to be repaid wholly or in part, shall be credited to Account 4300, Other
   long-term liabilities and deferred credits; when final determination has
   been made as to the amount to be returned, any unrefunded amounts shall be
   credited to the accounts charged with the cost of such construction. Amounts
   received for the construction of plant, the ownership of which rests with or
   will revert to others, shall be credited to the accounts charged with the
   cost of such construction. (Note also Account 7100, Other operating income
   and expense.)

   (3) When telecommunications plant ordinarily having a service life of more
   than one year is installed for temporary use in providing telecommunications
   service, it shall be accounted for in the same manner as plant having a
   service life of more than one year. This includes temporary installations of
   plant (such as poles, wire and cable) installed to maintain service during
   the progress of highway reconstruction or during interruptions due to storms
   or other casualties, equipment used for the training of operators, equipment
   used to provide intercepting positions in central offices to handle traffic
   for  a  short  period  following  extensive system changes and similar
   installations of property used to provide telecommunications service.

   (4) The cost of the individual items of equipment, classifiable to Accounts
   2112, Motor vehicles; 2113, Aircraft; 2114, Tools and other work equipment;
   2122, Furniture; 2123, Office equipment; 2124, General purpose computers,
   costing $2,000 or less or having a life of less than one year shall be
   charged to the applicable expense accounts, except for personal computers
   falling within Account 2124. Personal computers classifiable to Account
   2124, with a total cost for all components of $500 or less, shall be charged
   to the applicable Plant Specific Operations Expense accounts. The cost of
   tools and test equipment located in the central office, classifiable to
   central office asset accounts 2210–2232 costing $2,000 or less or having a
   life of less than one year shall be charged to the applicable Plant Specific
   Operations Expense accounts. If the aggregate investment in the items is
   relatively  large  at  the  time of acquisition, such amounts shall be
   maintained in an applicable material and supplies account until items are
   used.

   (b) Telecommunications plant acquired. (1) Property, plant and equipment
   acquired from an entity, whether or not affiliated with the accounting
   company, shall be accounted for at original cost, except that property,
   plant and equipment acquired from a nonaffiliated entity shall be accounted
   for at acquisition cost if the purchase price is less than $100,000 for
   Class A companies or $25,000 for Class B companies.

   (2) The accounting for property, plant and equipment to be recorded at
   original cost shall be as follows:

   (i) The amount of money paid (or current money value of any consideration
   other than money exchanged) for the property (together with preliminary
   expenses incurred in connection the acquisition) shall be charged to Account
   1438, Deferred maintenance, retirements, and other deferred charges.

   (ii) The original cost, estimated if not known, of telecommunications plant,
   governmental franchises and other similar rights acquired shall be charged
   to the applicable telecommunications plant accounts, Telecommunications
   Plant Under Construction, and Property Held For Future Telecommunications
   Use, as appropriate, and credited to Account 1439. When the actual original
   cost cannot be determined and estimates are used, the company shall be
   prepared to furnish the Commission with the particulars of such estimates.

   (iii) Accumulated Depreciation and amortization balances related to plant
   acquired shall be credited to Account 3100, Accumulated depreciation, or
   Account 3200, Accumulated depreciation—held for future telecommunications
   use,  or Account 3410, Accumulated amortization—capitalized leases and
   debited to Account 1438. Accumulated amortization balances related to plant
   acquired which ultimately is recorded in Accounts 2005, Telecommunications
   plant adjustment, Account 2682, Leasehold improvements, or Account 2690,
   Intangibles  shall be credited to these asset accounts, and debited to
   Account 1438.

   (iv) Any amount remaining in Account 1438, applicable to the plant acquired,
   shall, upon completion of the entries provided in paragraphs (b)(2)(i)
   through (b)(2)(iii) of this section, be debited or credited, as applicable,
   to Account 2007, Goodwill, or to Account 2005, Telecommunications plant
   adjustment, as appropriate.

   (3) A memorandum record shall be kept showing the amount of contributions in
   aid of construction applicable to the property acquired as shown by the
   accounts of the previous owner.

   (c)  Cost  of construction. (1) Telecommunications plant represents an
   economic resource which will be used to provide future services, the cost of
   which will be allocated in a rational and systematic manner to the future
   periods in which it provides benefits. In accounting for construction costs,
   the utility shall charge to the telecommunications plant accounts, where
   applicable, all direct and indirect costs.

   (2) Direct and indirect costs shall include, but not be limited to:

   (i) “Labor” includes the wages and expenses of employees directly engaged in
   or in direct charge of construction work. It includes expenses directly
   related to an employee's wages, such as worker's compensation insurance,
   payroll taxes, benefits and other similar items of expense.

   (ii)  “Engineering”  includes the portion of the wages and expenses of
   engineers, draftsmen, inspectors, and their direct supervision applicable to
   construction work. It includes expenses directly related to an employee's
   wages, such as worker's compensation insurance, payroll taxes, benefits and
   other similar items of expense.

   (iii) “Material and supplies” includes the purchase price of material used
   at the point of free delivery plus the costs of inspection, loading and
   transportation,  and  an equitable portion of provisioning expense. In
   determining the cost of material used, proper allowance shall be made for
   unused material, for material recovered from temporary structures used in
   performing the work involved, and for discounts allowed and realized in the
   purchase of material. This item does not include construction material that
   is stolen or rendered unusable due to vandalism. Such material should be
   charged to the applicable plant specific operations expense accounts.

   (iv) “Transportation” includes the cost of transporting employees, material
   and  supplies, tools and other work equipment to and from the physical
   construction location. It includes amounts paid therefor to other companies
   or individuals and the cost of using the company's own motor vehicles or
   other transportation equipment.

   (v) “Contract work” includes amounts paid for work performed under contract
   or other agreement by other companies, firms or individuals; engineering and
   supervision  applicable  to  such  work; cost incident to the award of
   contracts; and the inspection of such work. The cost of construction work
   performed by affiliated companies and other details relating thereto shall
   be available from the work in progress and supporting records.

   (vi) “Protection” includes the cost of protecting the company's property
   from fire or other casualties and the cost of preventing damages to others
   or the property of others.

   (vii) “Privileges, Permits, and Rights of way” includes such costs incurred
   in obtaining these privileges, permits, or rights of way in connection with
   construction work, such as for use of private property, streets or highways.
   The cost of such privileges and permits shall be included in the cost of the
   work for which the privileges or permits are obtained, except for costs
   includable in Account 2111, Land, and Account 2690, Intangibles.

   (viii) “Taxes” includes taxes properly includable in construction costs
   before the facilities are completed for service, which taxes are assessed
   separately from taxes on operating property or under conditions that permit
   separate identification of the amount chargeable to construction.

   (ix)  “Special  machine  service” includes the cost of labor expended,
   materials  and  supplies  consumed  and other expenses incurred in the
   maintenance, operation and use of special and other labor saving machines
   (other than transportation equipment (such as trenching equipment, cable
   plows and pole setting trucks. Also included are expenditures for rental,
   maintenance  and  operation  of  such machines owned by others. When a
   construction  job  requires the purchase of special machines, the cost
   thereof, less the appraised or salvage value at the time of release from the
   job, shall be included in the cost of construction.

   (x) Allowance for funds used during construction (“AFUDC”) provides for the
   cost of financing the construction of telecommunications plant. AFUDC shall
   be charged to Account 2003, Telecommunications plant under construction, and
   credited to Account 7300, Nonoperating income and expense. The rate for
   calculating  AFUDC  shall be determined as follows: If financing plans
   associate a specific new borrowing with an asset, the rate on that borrowing
   may be used for the asset; if no specific new borrowing is associated with
   an asset or if the average accumulated expenditures for the asset exceed the
   amounts of specific new borrowing associated with it, the capitalization
   rate to be applied to such excess shall be the weighted average of the rates
   applicable to other borrowings of the enterprise. The amount of interest
   cost capitalized in an accounting period shall not exceed the total amount
   of interest cost incurred by the company in that period.

   (xi) “Insurance” includes premiums paid specifically for protection against
   loss and damage in connection with the construction of telecommunications
   plant due to fire or other casualty, injury to or death of employees or
   others, damages to property of others, defalcations of employees and agents
   and the non-performance of contractual obligations of others.

   (xii) “Construction services” include the cost of telephone, electricity,
   power, construction quarters, office space and equipment directly related to
   the construction project.

   (xiii) “Indirect construction costs” shall include indirect costs such as
   general engineering, supervision and support. Such costs, in addition to
   direct supervision, shall include indirect plant operations and engineering
   supervision up to, but not including, supervision by executive officers
   whose  pay  and  expenses  are chargeable to Account 6720, General and
   administrative. The records supporting the entries for indirect construction
   costs  shall be kept so as to show the nature of the expenditures, the
   individual jobs and accounts charged, and the bases of the distribution. The
   amounts charged to each plant account for indirect costs shall be readily
   determinable. The instructions contained herein shall not be interpreted as
   permitting the addition to plant of amounts to cover indirect costs based on
   arbitrary allocations.

   (xiv) The cost of construction shall not include any amounts classifiable as
   Corporate Operations Expense.

   (d) Telecommunications plant retired. (1) Telecommunications plant accounts
   shall at all times disclose the original cost of all property in service.
   When any item of property subject to plant retirement accounting is worn
   out, lost, sold, destroyed, abandoned, surrendered upon lapse of title,
   becomes permanently unserviceable, is withdrawn or for any other reason is
   retired from service, the plant accounts applicable to that item shall be
   credited with the original cost of the plant retired whether replaced or not
   (except  as  provided  for minor items in paragraph (d)(2)(ii) of this
   section). Normally, these retirement credits with respect to such plant as
   entire buildings, entire central offices, all plant abandoned and any large
   sections of plant withdrawn from service, shall be entered in the accounts
   for the month in which use of the property ceased. For any other plant
   withdrawn from service, the retirement credits shall be entered no later
   than the next succeeding month. Literal compliance with the provision for
   timing of entries with respect to property amounting to less than $50,000
   retired under any one project is not required if an unreasonable amount of
   recordkeeping and estimating of quantities, original costs and salvage is
   necessary. The retirement entry shall refer to the continuing property
   record, or records supplemental thereto, from which the cost was obtained
   (note also paragraph (d)(3) of this section). Every company shall establish
   procedures which will ensure compliance with these requirements.

   (2) To avoid undue refinement, depreciable telecommunications plant shall be
   accounted for as follows:

   (i)  Retirement  units: This group includes major items of property, a
   representative list of which shall be prescribed by this Commission. In lieu
   of the retirement units prescribed with respect to a particular account, a
   company may, after obtaining specific approval by this Commission, establish
   and maintain its own list of retirement units for a portion or all of the
   plant in any such account. For items included on the retirement units list,
   the original cost of any such items retired shall be credited to the plant
   account and charged to Account 3100 Accumulated Depreciation, whether or not
   replaced.  The original cost of retirement units installed in place of
   property retired shall be charged to the applicable telecommunications plant
   account.

   (ii) Minor items: This group includes any part or element of plant which is
   not designated as a retirement unit. The original cost of a minor item of
   property when included in the specific or average cost for a retirement unit
   or units requires no separate credit to the telecommunications plant account
   when such a minor item is retired. The cost of replacement shall be charged
   to the account applicable for the cost of repairs of the property. However,
   if the replacement effects a substantial betterment (the primary aim of
   which is to make the property affected more useful, of greater durability,
   of greater capacity or more economical in operation), the excess cost of
   such a replacement, over the estimated cost at the then current prices of
   replacement without betterment of the minor items being retired, shall be
   charged to the applicable telecommunications plant account.

   (3) The cost of property to be retired shall be the amount at which property
   is included in the telecommunications plant accounts. However, when it is
   impracticable to determine the cost of each item due to the relatively large
   number  or small cost of such items, the average cost of all the items
   covered  by an appropriate subdivision of the account shall be used in
   determining the cost to be assigned to such items when retired. The method
   used in determining average cost must give due regard to the quantity,
   vintage, size and kind of items, the area in which they were installed and
   their classification in other respects. Average cost may be applied in
   retirement of such items as poles, wire, cable, cable terminals, conduit and
   booths. Any company may use average cost of property installed in a year or
   band  of years as approved by the Commission. It should be understood,
   however, that the use of average costs shall not relieve the company of the
   requirement for maintaining its continuing property records to show, where
   practicable, dates of installation and removal for purposes of mortality
   studies.  (See  §32.2000(f)  of  this  subpart, Standard Practices for
   Establishing and Maintaining Continuing Property Records.)

   (4) The accounting for the retirement of property, plant and equipment shall
   be as provided above except that amounts in Account 2111, Land, and amounts
   for works of art recorded in Account 2122, Furniture, shall be treated at
   disposition as a gain or loss and shall be credited or debited to Account
   7100, Other operating income and expense, as applicable. If land or artwork
   is retained by the company and held for sale, the cost shall be charged to
   Account 2006, Nonoperating plant.

   (5)  When  the  telecommunications plant is sold together with traffic
   associated therewith, the original cost of the property shall be credited to
   the applicable plant accounts and the estimated amounts carried with respect
   thereto in the accumulated depreciation and amortization accounts shall be
   charged to such accumulated accounts. The difference, if any, between the
   net amount of such debit and credit items and the consideration received
   (less commissions and other expenses of making the sale) for the property
   shall be included in Account 7300, Nonoperating income and expense. The
   accounting for depreciable telecommunications plant sold without the traffic
   associated therewith shall be in accordance with the accounting provided in
   §32.3100(c).

   (e) Basic property records. (1) The basic property records are that portion
   of  the total property accounting system which preserves the following
   detailed information:

   (i) The identity, vintage, location and original cost of units of property;

   (ii) Original and ongoing transactional data (plant account activity) in
   terms of such units; and

   (iii) Any other specific financial and cost accounting information not
   properly warranting separate disclosure as an account or subaccount but
   which is needed to support regulatory, cost, tax, management and other
   specific accounting information needs and requirements.

   (2) The basic property records must be: (i) Subject to internal accounting
   controls,  (ii)  auditable,  (iii) equal in the aggregate to the total
   investment reflected in the financial property control accounts as well as
   the  total  of  the  cost  allocations supporting the determination of
   cost-of-service  at  any particular point in time, and (iv) maintained
   throughout the life of the property.

   (3) The basic property records shall consist of (i) continuing property
   records and (ii) records supplemental thereto which together reveal clearly,
   by accounting area, the detailed and systematically summarized information
   necessary to meet fully the requirements of paragraphs (e)(1) and (e)(2) of
   this section.

   (4) Companies shall establish and maintain basic property records for each
   class of property recorded in the several plant accounts which comprise the
   balance sheet Account 2001, Telecommunications Plant In Service, Account
   2002, Property Held for Future Telecommunications Use, and Account 2006,
   Nonoperating Plant.

   (5) The company shall notify the Commission of a plan for the basic property
   record as follows:

   (i) Not later than June 30 of the year following that in which it becomes
   subject  to  this  system of accounts, the company shall file with the
   Commission two (2) copies of a complete plan of the method to be used in the
   compilation  of  a basic property record with respect to each class of
   property.  The  plan shall include a list of proposed accounting areas
   accompanied by description of the boundaries of each area as defined in
   accordance with the requirements of §32.2000(f)(1) (i) and (ii) of this
   subpart.  The  plan shall also include a list of property record units
   proposed for use under each regulated plant account. These property record
   units shall be selected such that the requirements of §32.2000(f)(2) (i),
   (ii) and (iii) of this subpart can be satisfied.

   (ii)  The company shall submit to the Commission one copy of any major
   proposed changes in its basic property record plan at least 30 days before
   the effective date of the proposed changes.

   (6) The company shall prepare and maintain the basic property record as
   follows:

   (i) Not later than June 30 of the year following that in which the company
   becomes subject to this system of accounts, begin the preparation of a basic
   property record.

   (ii) Complete within two years of the prescribed beginning date, basic
   property records for all property as of the end of the preceding calendar
   year.

   (iii) Promptly process in the basic property records all property changes
   affecting periods subsequent to initial establishment of the basic property
   record.

   (7) The basic property record components (see paragraph (c) of this section)
   shall be arranged in conformity with the regulated plant accounts prescribed
   in this section of accounts as follows:

   (i)  The continuing property records shall be compiled on the basis of
   original cost (or other book cost consistent with this system of accounts).
   The  continuing  property records shall be maintained as prescribed in
   §32.2000(f)(2)(iii)  of  this  subpart in such manner as will meet the
   following basic objectives:

   (A)  Provide for the verification of property record units by physical
   examination.

   (B) Provide for accurate accounting for retirements.

   (C) Provide data for use in connection with depreciation studies.

   (ii) The records supplemental to the continuing property records shall
   disclose   such  service  designations,  usage  measurement  criteria,
   apportionment factors, or other data as may be prescribed by the Commission
   in this part or other parts of its Rules and Regulations. Such data are
   subject to the same general controls and standards for auditability and
   support as are all other elements of the basic property records.

   (f) Standard practices for establishing and maintaining continuing property
   records —(1) Accounting area. (i) The continuing property record, as related
   to  each primary plant account, shall be established and maintained by
   subaccounts for each accounting area. An accounting area is the smallest
   territory of the company for which accounting records of investment are
   maintained for all plant accounts within the area. Areas already established
   for administrative, accounting, valuation, or other purposes may be adopted
   for  this purpose when appropriate. In no case shall the boundaries of
   accounting areas cross either State lines or boundaries prescribed by the
   Commission.

   (ii) In determining the limit of each area, consideration shall be given to
   the quantities of property, construction conditions, operating districts,
   county and township lines, taxing district boundaries, city limits, and
   other political or geographical limits, in order that the area adopted may
   have maximum adaptability, within the confines of practicability, for both
   the  company's  purpose  and  those  of  Federal, State, and municipal
   authorities.

   (2) Property record units. (i) In each of the established accounting areas,
   the “property record units” which are to be maintained in the continuing
   property record shall be set forth separately, classified by size and type
   with the amount of original cost (or other appropriate book cost) associated
   with such units. When a list of property record units has been accepted by
   the Commission, they shall become the units referred to in this statement of
   standard practices. Such units shall apply to only the regulated portion of
   this system of accounts.

   (ii) When it is found necessary to revise this list because of the addition
   of units used in providing new types of service, or new units resulting from
   improvements in technology, or because of the grouping or elimination of
   units which no longer merit separate recognition as property record units,
   one  copy  of  such changes shall be submitted to the Commission. Upon
   appropriate showing by the company, the Commission may specifically exempt
   the company from these filing requirements.

   (iii) The continuing property record shall reveal the description, location,
   date of placement, the essential details of construction, and the original
   cost (note also §32.2000(f)(3) of this subpart) of the property record
   units.  The continuing property record and other underlying records of
   construction costs shall be so maintained that, upon retirement of one or
   more  retirement  units or of minor items without replacement when not
   included in the costs of retirement units, the actual cost or a reasonably
   accurate estimate of the cost of the plant retired can be determined.

   (3) Methods of determining original cost of property record units. The
   original cost of the property record units shall be determined by analyses
   of the construction costs incurred as shown by completion reports and other
   data,  accumulated  in  the  respective  construction  work  orders or
   authorizations. Costs shall be allocated to and associated with the property
   record units to facilitate accounting for retirements. The original cost of
   property  record  units  shall be determined by unit identification or
   averaging as described in paragraphs (f)(3) (i) and (ii) of this section.

   (i) Unit identification. Cost shall be identified and maintained by specific
   location for property record units contained within certain regulated plant
   accounts  or account groupings such as Land, Buildings, Central Office
   Assets, Motor Vehicles, garage work equipment included in Account 2114,
   Tools and other work equipment, and Furniture. In addition, units involved
   in any unusual or special type of construction shall be recorded by their
   specific location costs (note also §32.2000(f)(3)(ii)(B)).

   (ii) Averaging. (A) Average costs may be developed for plant consisting of a
   large number of similar units such as terminal equipment, poles, wire,
   cable, cable terminals, conduit, furniture, and work equipment. Units of
   similar size and type within each specified accounting area and regulated
   plant account may be grouped. Each such average cost shall be set forth in
   the continuing property record of the units with which it is associated.

   (B) The averaging of costs permitted under the provisions of the foregoing
   paragraph is restricted to plant installed in a particular vintage or band
   of years incurred within an accounting area. This paragraph does not permit
   the inclusion of the cost of units involved in any unusual or special type
   of construction. The units involved in such unusual or special type of
   construction shall be recorded at cost by location.

   (4) Estimates. In cases where the actual original cost of property cannot be
   ascertained,  such  as pricing an inventory for the initial entry of a
   continuing property record or the pricing of an acquisition for which a
   continuing property record has not been maintained, the original cost may be
   estimated.  Any  estimated  original cost shall be consistent with the
   accounting practices in effect at the time the property was constructed.

   (5) Identification of property record units. There shall be shown in the
   continuing property record or in record supplements thereof, a complete
   description of the property records units in such detail as to identify such
   units. The description shall include the identification of the work order
   under which constructed, the year of installation (unless not determinable
   per §32.2000(f)(4) of this subpart, specific location of the property within
   each accounting area in such manner that it can be readily spot-checked for
   proof of physical existence, the accounting company's number or designation,
   and any other description used in connection with the determination of the
   original cost. Descriptions of units of similar size and type shall follow
   prescribed groupings.

   (6) Reinstalled units. When units to which average costs are not applied,
   i.e.,  specific  and  fixed location units, are removed or retired and
   subsequently reinstalled, the date when the unit was first charged to the
   appropriate plant account shall, when required for adequate service life
   studies and reasonably accurate retirement accounting, be shown in addition
   to the date of reinstallation.

   (7) Age and service life of property. The continuing property record shall
   disclose the age of existing property and the supporting records shall
   disclose  the  service  life of property retired. Exceptions from this
   requirement  for  any  property  record unit shall be submitted to the
   Commission for approval.

   (8) Reference to sources of information. There shall be shown by appropriate
   reference the source of all entries. All drawings, computations, and other
   detailed records which support quantities and costs or estimated costs shall
   be retained as a part of or in support of the continuing property record.

   (9) Jointly owned property. (i) With respect to jointly owned property,
   there  shall  be  shown  in  the continuing property record or records
   supplemental thereto:

   (A) The identity of all joint owners.

   (B) The percentage owned by the accounting company.

   (ii)  When regulated plant is constructed under arrangements for joint
   ownership, the amount received by the constructing company from the other
   joint owner or owners shall be credited as a reduction of the gross cost of
   the plant in place.

   (iii)  When  a sale of a part interest in regulated plant is made, the
   fractional interest sold shall be treated as a retirement and the amount
   received shall be treated as salvage. The continuing property record or
   records  supplemental  thereto  shall  be so maintained as to identify
   separately retirements of this nature from physical retirements of jointly
   owned plant.

   (iv) If jointly owned regulated property is substantial in relation to the
   total of the same kind of regulated property owned wholly by the company,
   such jointly owned regulated property shall be appropriately segregated in
   the continuing property record.

   (g) Depreciation accounting —(1) Computation of depreciation rates. (i)
   Unless otherwise provided by the Commission, either through prior approval
   or upon prescription by the Commission, depreciation percentage rates shall
   be computed in conformity with a group plan of accounting for depreciation
   and shall be such that the loss in service value of the property, except for
   losses excluded under the definition of depreciation, may be distributed
   under the straight-line method during the service life of the property.

   (ii)  In  the  event  any  composite percentage rate becomes no longer
   applicable,  revised  composite  percentage rates shall be computed in
   accordance with paragraph (g)(1)(i) of this section.

   (iii)  The  company  shall  keep such records of property and property
   retirements as will allow the determination of the service life of property
   which has been retired, or facilitate the determination of service life
   indications by mortality, turnover, or other appropriate methods. Such
   records will also allow the determination of the percentage of salvage value
   and cost of removal for property retired from each class of depreciable
   plant.

   (2) Depreciation charges. (i) A separate annual percentage rate for each
   depreciation category of telecommunications plant shall be used in computing
   depreciation charges.

   (ii) Companies, upon receiving prior approval from this Commission, or, upon
   prescription by this Commission, shall apply such depreciation rate, except
   where provisions of paragraph (g)(2)(iv) of this section apply, as will
   ratably distribute on a straight line basis the difference between the net
   book cost of a class or subclass of plant and its estimated net salvage
   during the known or estimated remaining service life of the plant.

   (iii) Charges for currently accruing depreciation shall be made monthly to
   the appropriate depreciation accounts, and corresponding credits shall be
   made to the appropriate depreciation reserve accounts. Current monthly
   charges shall normally be computed by the application of one-twelfth of the
   annual depreciation rate to the monthly average balance of the associated
   category of plant. The average monthly balance shall be computed using the
   balance as of the first and last days of the current month.

   (iv) In certain circumstances and upon prior approval of this Commission,
   monthly charges may be determined in total or in part through the use of
   other  methods whereby selected plant balances or portions thereof are
   ratably  distributed  over periods prescribed by this Commission. Such
   circumstances  could include but not be limited to factors such as the
   existence of reserve deficiencies or surpluses, types of plant that will be
   completely retired in the near future, and changes in the accounting for
   plant. Where alternative methods have been used in accordance with this
   subparagraph, such amounts shall be applied separately or in combination
   with  rates determined in accordance with paragraph (g)(2)(ii) of this
   section.

   (3) Acquired depreciable plant. When acquired depreciable plant carried in
   Account 1438, Deferred maintenance, retirements and other deferred charges,
   is distributed to the appropriate plant accounts, adjusting entries shall be
   made covering the depreciation charges applicable to such plant for the
   period during which it was carried in Account 1438.

   (4) Plant Retired for Nonrecurring Factors not Recognized in Depreciation
   Rates.

   (i) A retirement will be considered as nonrecurring (extraordinary) only if
   the following criteria are met:

   (A) The impending retirement was not adequately considered in setting past
   depreciation rates.

   (B) The charging of the retirement against the reserve will unduly deplete
   that reserve.

   (C) The retirement is unusual such that similar retirements are not likely
   to recur in the future.

   (5) Upon direction or approval from this Commission, the company shall
   credit Account 3100, Accumulated Depreciation, and charge Account 1438,
   Deferred Maintenance, retirements and other deferred charges, with the
   unprovided-for loss in service value. Such amounts shall be distributed from
   Account 1438 to Account 6561, Depreciation expense—Telecommunications plant
   in service, or Account 6562, Depreciation expense—property held for future
   telecommunications use, over such period as this Commission may direct or
   approve.

   (h)  Amortization  accounting.  (1)  Unless otherwise provided by this
   Commission,  either  through  approval,  or  upon prescription by this
   Commission, amortization shall be computed on the straight-line method,
   i.e., equal annual amounts shall be applied. The cost of each type asset
   shall be amortized on the basis the estimated life of that asset and shall
   not be written off in the accounting period in which the asset is acquired.
   A reasonable estimate of the useful life may be based on the upper or lower
   limits even though a fixed existence is not determinable. However, the
   period of amortization shall not exceed forty years.

   (2) In the event any estimated useful life becomes no longer applicable, a
   revised  estimated  useful life shall be determined in accordance with
   paragraph (h)(1) of this section.

   (3)  Amortization  charges  shall  be  made monthly to the appropriate
   amortization expense accounts and corresponding credits shall be made to
   accounts 2005, 2682, 2690, and 3410, as appropriate. Monthly charges shall
   be computed by the application of one-twelfth to the annual amortization
   amount.

   (4) The company shall keep such records as will allow the determination of
   the useful life of the asset.

   (i) Accounting for software. The original cost of initial operating system
   software  for computers shall be classified to the same account as the
   associated hardware whether acquired separately or in conjunction with the
   associated hardware.

   (j)  Plant  Accounts to be Maintained by Class A and Class B telephone
   companies as indicated:
   Account title Class A
   account Class B
   account
   Regulated plant
   Property, plant and equipment:
   Telecommunications plant in service ^12001 ^12001
   Property held for future telecommunications use 2002 2002
   Telecommunications plant under construction-short term 2003 2003
   Telecommunications plant adjustment 2005 2005
   Nonoperating plant 2006 2006
   Goodwill 2007 2007
   Telecommunications plant in service (TPIS)
   TPIS—General support assets:
   Land and support assets 2110
   Land 2111
   Motor vehicles 2112
   Aircraft 2113
   Tools and other work equipment 2114
   Buildings 2121
   Furniture 2122
   Office equipment 2123
   General purpose computers 2124
   TPIS—Central Office assets:
   Central Office—switching 2210
   Non-digital switching 2211
   Digital electronic switching 2212
   Operator systems 2220 2220
   Central Office—transmission 2230
   Radio systems 2231
   Circuit equipment 2232
   TPIS—Information origination/termination assets:
   Information origination termination 2310
   Station apparatus 2311
   Customer premises wiring 2321
   Large private branch exchanges 2341
   Public telephone terminal equipment 2351
   Other terminal equipment 2362
   TPIS—Cable and wire facilities assets:
   Cable and wire facilities 2410
   Poles 2411
   Aerial cable 2421
   Underground cable 2422
   Buried cable 2423
   Submarine and deep sea cable 2424
   Intrabuilding network cable 2426
   Aerial wire 2431
   Conduit systems 2441
   TPIS—Amortizable assets:
   Amortizable tangible assets 2680
   Capital leases 2681
   Leasehold improvements 2682
   Intangibles 2690 2690

   ^1Balance sheet summary account only.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  52 FR 7580 , Mar. 12, 1987;  53 FR 30059 , Aug. 10, 1988;  59 FR 46930 , Sept. 13, 1994;  60 FR 12138 , Mar. 6,
   1995;  62 FR 39451 , July 23, 1997;  64 FR 50007 , Sept. 15, 1999;  67 FR 5683 ,
   Feb. 6, 2002;  69 FR 53648 , Sept. 2, 2004]

   Effective Date Note:   At  64 FR 50007 , Sept. 15, 1999, §32.2000 was amended
   by removing paragraph (b)(4). This section contains information collection
   requirements and will not become effective until approved by the Office of
   Management and Budget.

§ 32.2001   Telecommunications plant in service.

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   This account shall include the original cost of the investment included in
   Accounts 2110 through 2690.

§ 32.2002   Property held for future telecommunications use.

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   (a) This account shall include the original cost of property owned and held
   for  no  longer  than  two  years  under  a  definite  plan for use in
   telecommunications service. If at the end of two years the property is not
   in service, the original cost of the property may remain in this account so
   long as the carrier excludes the original cost and associated depreciation
   from its ratebase and ratemaking considerations and report those amounts in
   reports filed with the Commission pursuant to 43.21(e)(1) and 43.21(e)(2) of
   this chapter.

   (b) Subsidiary records shall be maintained to show the character of the
   amounts carried in this account.

   [ 65 FR 16334 , Mar. 28, 2000]

§ 32.2003   Telecommunications plant under construction.

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   (a) This account shall include the original cost of construction projects
   (note also §32.2000(c)) of this part and the cost of software development
   projects that are not yet ready for their intended use.

   (b) There may be charged directly to the appropriate plant accounts the cost
   of any construction project which is estimated to be completed and ready for
   service within two months from the date on which the project was begun.
   There may also be charged directly to the plant accounts the cost of any
   construction project for which the gross additions to plant are estimated to
   amount to less than $100,000.

   (c) If a construction project has been suspended for six months or more, the
   cost of the project included in this account may remain in this account so
   long as the carrier excludes the original cost and associated depreciation
   from its ratebase and ratemaking considerations and reports those amounts in
   reports filed with the Commission pursuant to §§43.21(e)(1) and 43.21(e)(2)
   of  this chapter. If a project is abandoned, the cost included in this
   account shall be charged to Account 7300, Nonoperating income and expense.

   (d) When any telecommunications plant, the cost of which has been included
   in this account, is completed ready for service, the cost thereof shall be
   credited to this account and charged to the appropriate telecommunications
   plant or other accounts.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  60 FR 12138 , Mar. 6, 1995;  64 FR 50007 , Sept. 15, 1999;  65 FR 16335 , Mar. 28, 2000;  67 FR 5685 , Feb. 6, 2002]

§ 32.2005   Telecommunications plant adjustment.

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   (a)  This  account shall include amounts determined in accordance with
   §32.2000(b) of this subpart representing the difference between (1) the fair
   market value of the telecommunications plant acquired, plus preliminary
   expenses incurred in connection with the acquisition; and (2) the original
   cost of such plant, governmental franchises and similar rights acquired,
   less the amounts of reserve requirements for depreciation and amortization
   of the property acquired. If the actual original cost is not known, the
   entries in this account shall be based upon an estimate of such costs.

   (b) The amounts recorded in this account with respect to each property
   acquisition (except land and artworks) shall be disposed of, written off, or
   provision shall be made for the amortization thereof, as follows:

   (1) Debit amounts may be charged in whole or in part, or amortized over a
   reasonable period through charges to Account 7300, Nonoperating income and
   expense, without further direction or approval by this Commission. When
   specifically  approved  by  this Commission, or when the provisions of
   paragraph (b)(3) of this section apply, debit amounts shall be amortized to
   Account 6565, Amortization expense—other.

   (2) Credit amounts shall be disposed of in such manner as this Commission
   may approve or direct, except for credit amounts referred to in paragraph
   (b)(4) of this section.

   (3)  The  amortization  associated  with  the  costs  recorded  in the
   Telecommunications plant adjustment account will be charged or credited, as
   appropriate, directly to this asset account, leaving a balance representing
   the unamortized cost.

   (4) Within one year from the date of inclusion in this account of a debit or
   credit amount with respect to a current acquisition, the company may dispose
   of the total amount from an acquisition of telephone plant by a lump-sum
   charge or credit, as appropriate, to Account 6565 without further approval
   of this Commission, provided that such amount does not exceed $100,000 and
   that the plant was not acquired from an affiliated company.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5685 , Feb. 6, 2002;  69 FR 53648 , Sept. 2, 2004]

§ 32.2006   Nonoperating plant.

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   (a)  This  account shall include the company's investment in regulated
   property  which  is  not includable in the plant accounts as operating
   telecommunications plant. It shall include the company's investment in
   telecommunications  property  held  for sale. (Note also Account 1406,
   Nonregulated Investments.)

   (b) Subsidiary records shall be maintained to show the character of the
   amounts carried in this account.

§ 32.2007   Goodwill.

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   (a) This account shall include any portion of the plant purchase price that
   cannot be assigned to specifically identifiable property acquired and such
   amount should be identified as “goodwill”. Such amounts included in this
   account shall be amortized to Account 7300, Nonoperating income and expense,
   on a straight line basis over the remaining life of the acquired plant, not
   to exceed 40 years.

   (b) The amounts included in this account shall be maintained to show the
   nature of each amount.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5686 , Feb. 6, 2002]

§ 32.2110   Land and support assets.

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   This account shall be used by Class B companies to record the original cost
   of land and support assets of the type and character required of Class A
   companies in Accounts 2111 through 2124.

§ 32.2111   Land.

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   (a) This account shall include the original cost of all land held in fee and
   of easements, and similar rights in land having a term of more than one year
   used for purposes other than the location of outside plant (see Accounts
   2411 through 2441) or externally mounted central office equipment (see
   Accounts 2211 and 2212). It shall also include special assessments upon land
   for the construction of public improvements.

   (b) When land, together with buildings thereon, is acquired, the original
   cost shall be fairly apportioned between the land and the buildings and
   accounted for accordingly. If the plan of acquisition contemplates the
   removal of buildings, the total cost of the land and buildings shall be
   accounted  for  as  the cost of the land, and the salvage value of the
   buildings when disposed of shall be deducted from the cost of the land so
   determined.

   (c) Annual or more frequent payments for use of land shall be recorded in
   the rent subsidiary record category for Account 6121, Land and Building
   Expense.

   (d) When land is acquired for which there is not a definite plan for its use
   in telecommunications service, its costs shall be included in Account 2006,
   Nonoperating Plant.

   (e) When land is acquired in excess of that required for telecommunications
   purposes, the cost of such excess land shall be included in Account 2006.

   (f) Installments of assessments for public improvement, including interest,
   if any, which are deferred without option to the company shall be included
   in this account only as they become due and payable. Interest on assessments
   which are not paid when due shall be included in Account 7500, Interest and
   related items.

   (g) When land is purchased for immediate use in a construction project, its
   cost shall be included in Account 2003, Telecommunications plant under
   construction, until such time as the project involved is completed and ready
   for service.

   (h) The original cost of leaseholds, easements, rights of way, and similar
   rights in land having a term of more than one year and not includable in
   Account  2111  shall  be included in the accounts for outside plant or
   externally mounted central office equipment in connection with which the
   rights were acquired.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5686 , Feb. 6, 2002]

§ 32.2112   Motor vehicles.

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   This account shall include the original cost of motor vehicles of the type
   which are designed and routinely licensed to operate on public streets and
   highways.

§ 32.2113   Aircraft.

   top

   This account shall include the original cost of aircraft and any associated
   equipment and furnishings installed as an integral part of the aircraft.

§ 32.2114   Tools and other work equipment.

   top

   This account shall include the original cost of special purpose vehicles and
   the original cost of tools and equipment used to maintain special purpose
   vehicles and items included in Accounts 2112 and 2113. This account shall
   also include the original cost of power-operated equipment, general purpose
   tools, and other items of work equipment.

   [ 64 FR 50007 , Sept. 15, 1999]

§ 32.2121   Buildings.

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   (a) This account shall include the original cost of buildings, and the cost
   of all permanent fixtures, machinery, appurtenances and appliances installed
   as a part thereof. It shall include costs incident to the construction or
   purchase of a building and to securing possession and title.

   (b)  When  land, together with the buildings thereon, is acquired, the
   original cost shall be fairly apportioned between the land and buildings,
   and  the  amount applicable to the buildings shall be included in this
   account. The amount applicable to the land shall be included in Account
   2111, Land.

   (c) This account shall not include the cost of any telephone equipment or
   wiring apparatus for generating or controlling electricity for operating the
   telephone system.

§ 32.2122   Furniture.

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   This  account shall include the original cost of furniture in offices,
   storerooms, shops, and all other quarters. This account shall also include
   the  cost of objects which possess aesthetic value, are of original or
   limited edition, and do not have a determinable useful life. The cost of any
   furniture attached to and constituting a part of a building shall be charged
   to account 2121, Buildings.

§ 32.2123   Office equipment.

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   This account shall include the original cost of office equipment in offices,
   shops and all other quarters. The cost of any equipment attached to and
   constituting  a  part  of a building shall be charged to Account 2121,
   Buildings.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5686 , Feb. 6, 2002]

§ 32.2124   General purpose computers.

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   (a) This account shall include the original cost of computers and peripheral
   devices which are designed to perform general administrative information
   processing activities.

   (b) Administrative information processing includes but is not limited to
   activities such as the preparation of financial, statistical, or other
   business analytical reports; preparation of payroll, customer bills, and
   cash management reports, and other records and reports not specifically
   designed  for  testing,  diagnosis,  maintenance  or  control  of  the
   telecommunications network facilities.

   (c) [Reserved]

   (d) This account does not include the cost of computers and their associated
   peripheral devices associated with switching, network signaling, network
   operations, or other specific telecommunications plant. Such computers and
   peripherals  shall be classified to the appropriate switching, network
   signaling, network expense, or other plant account.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  64 FR 50007 , Sept. 15, 1999]

§ 32.2210   Central office—switching.

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   This account shall be used by Class B companies to record the original cost
   of switching assets of the type and character required of Class A companies
   in Accounts 2211 through 2212.

   [ 67 FR 5686 , Feb. 6, 2002]

§ 32.2211   Non-digital switching.

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   (a) This account shall include:

   (1) Original cost of stored program control analog circuit-switching and
   associated equipment.

   (2) Cost of remote analog electronic circuit switches.

   (3) Original cost of non-electronic circuit-switching equipment such as
   Step-by-Step, Crossbar, and Other Electro-Mechanical Switching.

   (b)  Switching  plant  excludes switchboards which perform an operator
   assistance function and equipment which is an integral part thereof. It does
   not exclude equipment used solely for the recording of calling telephone
   numbers in connection with customer dialed charged traffic, dial tandem
   switchboards and special service switchboards used in conjunction with
   private line service; such equipment shall be classified to the particular
   switch that if serves.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5686 , Feb. 6, 2002]

§ 32.2212   Digital electronic switching.

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   (a) This account shall include the original cost of stored program control
   digital switches and their associated equipment. Included in this account
   are  digital  switches which utilize either dedicated or non-dedicated
   circuits.  This  account shall also include the cost of remote digital
   electronic  switches.  The  investment in digital electronic switching
   equipment shall be maintained in the following subaccounts: 2212.1 Circuit
   and 2212.2 Packet.

   (b)  This subaccount 2212.1 Circuit shall include the original cost of
   digital electronic switching equipment used to provide circuit switching.
   Circuit switching is a method of routing traffic through a switching center,
   from local users or from other switching centers, whereby a connection is
   established between the calling and called stations until the connection is
   released by the called or calling station.

   (c) This subaccount 2212.2 Packet shall include the original cost of digital
   electronic switching equipment used to provide packet switching. Packet
   switching is the process of routing and transferring information by means of
   addressed packets so that a channel is occupied during the transmission of
   the packet only, and upon completion of the transmission the channel is made
   available for the transfer of other traffic.

   (d) Digital electronic switching equipment used to provide both circuit and
   packet switching shall be recorded in the subaccounts 2212.1 Circuit and
   2212.2 Packet based upon its predominant use.

   (e)  Switching  plant  excludes switchboards which perform an operator
   assistance function and equipment which is an integral part thereof. It does
   not exclude equipment used solely for the recording of calling telephone
   numbers in connection with customer dialed charged traffic, dial tandem
   switchboards and special service switchboards used in conjunction with
   private line service; such equipment shall be classified to the particular
   switch that it serves.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5686 , Feb. 6, 2002]

§ 32.2220   Operator systems.

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   (a) This account shall include the original cost of those items of equipment
   used to assist subscribers in utilizing the network and equipment used in
   the provision of directory assistance, call intercept, and other operator
   assisted call completion activities.

   (b) This account does not include equipment used solely for the recording of
   calling  telephone  numbers in connection with customer dialed charged
   traffic, dial tandem switchboards and special service switchboards used in
   conjunction with private line service; such equipment shall be classfied to
   the particular switch that it serves.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  59 FR 46930 , Sept. 13, 1994]

§ 32.2230   Central office—transmission.

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   This account shall be used by Class B companies to record the original cost
   of radio systems and circuit equipment of the type and character required of
   Class A companies in Accounts 2231 and 2232.

§ 32.2231   Radio systems.

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   (a) This account shall include the original cost of ownership of radio
   transmitters and receivers. This account shall include the original cost of
   ownership interest in satellites (including land-side spares), other spare
   parts, material and supplies. It shall include launch insurance and other
   satellite launch costs. This account shall also include the original cost of
   earth stations and spare parts, material or supplies therefor.

   (b) This account shall also include the original cost of radio equipment
   used  to provide radio communication channels. Radio equipment is that
   equipment which is used for the generation, amplification, propagation,
   reception, modulation, and demodulation of radio waves in free space over
   which  communication channels can be provided. This account shall also
   include  the  associated carrier and auxiliary equipment and patch bay
   equipment which is an integral part of the radio equipment. Such equipment
   may  be located in central office building, terminal room, or repeater
   stations or may be mounted on towers, masts, or other supports.

   [ 67 FR 5686 , Feb. 6, 2002]

§ 32.2232   Circuit equipment.

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   (a) This account shall include the original cost of equipment which is used
   to reduce the number of physical pairs otherwise required to serve a given
   number of subscribers by utilizing carrier systems, concentration stages or
   combinations  of  both.  It  shall include equipment that provides for
   simultaneous  use  of  a  number  of  interoffice channels on a single
   transmission path. This account shall also include equipment which is used
   for the amplification, modulation, regeneration, circuit patching, balancing
   or  control  of  signals  transmitted  over interoffice communications
   transmission channels. This account shall include equipment which utilizes
   the message path to carry signaling information or which utilizes separate
   channels  between  switching offices to transmit signaling information
   independent  of  the  subscribers' communication paths or transmission
   channels. This account shall also include the original cost of associated
   material used in the construction of such plant. Circuit equipment may be
   located in central offices, in manholes, on poles, in cabinets or huts, or
   at other company locations. The investment in circuit equipment shall be
   maintained  in the following subaccounts: 2232.1 Electronic and 2232.2
   Optical.

   (b) This subaccount 2232.1 Electronic shall include the original cost of
   electronic circuit equipment.

   (c)  This subaccount 2232.2 Optical shall include the original cost of
   optical circuit equipment.

   (d) Circuit equipment that converts electronic signals to optical signals or
   optical signals to electronic signals shall be categorized as electronic.

   (e) This account excludes carrier and auxiliary equipment and patch bays
   which are includable in Account 2231.2, Other Radio Facilities. This account
   also excludes such equipment which is an integral component of a major unit
   which is classifiable to other accounts.

   (f) Subsidiary record categories shall be maintained in order that the
   company may separately report the amounts contained herein that relate to
   digital and analog. Such subsidiary record categories shall be reported as
   required by part 43 of this Commission's Rules and Regulations.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5686 , Feb. 6, 2002]

§ 32.2310   Information origination/termination.

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   This account shall be used by Class B companies to record the original cost
   of information origination/termination equipment of the type and character
   required of Class A companies in Accounts 2311 through 2362.

§ 32.2311   Station apparatus.

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   (a) This account shall include the original cost of station apparatus,
   including teletypewriter equipment, telephone and miscellaneous equipment,
   small private branch exchanges and radio equipment (excluding mobile),
   installed for customer's use. Items included in this account shall remain
   herein until finally disposed of or until used in such manner as to warrant
   inclusion in other accounts.

   (b) Each company shall prepare a list of station apparatus which shall be
   used as its list of disposition units for this account, the cost of which
   when finally disposed of shall be credited to this account and charged to
   Account 3100, Accumulated Depreciation.

   (c)  The  cost of cross-connection boxes, distributing frames or other
   distribution points which are installed to terminate intrabuilding network
   cable shall be charged to Account 2426, Intrabuilding Network Cable.

   (d) Operator head sets and transmitters in central offices and at private
   branch exchanges, and test sets such as those used by wire chiefs, outside
   plant technicians, and others, shall be included in Account 2114, Tools and
   other work equipment, Account 2220, Operator systems, or Account 2341, Large
   Private Branch Exchanges, as appropriate.

   (e) Station apparatus for company official use shall be included in Account
   2123, Office Equipment.

   (f)  Periodic  asset verification, as prescribed by generally accepted
   accounting principles, shall be taken of all station apparatus in stock that
   are included in this account. The number of such station apparatus items as
   determined  by this verification together with the number of all other
   station apparatus items included in this account, shall be compared with the
   corresponding number of station apparatus items as shown by the respective
   control records. The original cost of any unreconciled differences thereby
   disclosed shall be adjusted through Account 3100, Accumulated Depreciation.
   Appropriate verifications shall be made at suitable intervals and necessary
   adjustments between this account and Account 3100 shall be made for all
   station apparatus included in this account.

   (g) Items of station apparatus in stock for which no further use in the
   ordinary  conduct  of  the  business  is  contemplated, but which as a
   precautionary measure are held for possible future contingencies instead of
   being discarded shall be excluded from this account and included in Account
   1220, Inventories.

   (h)  Embedded CPE is that equipment or inventory which was tariffed or
   otherwise subject to the jurisdictional separations process as of January 1,
   1983.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  52 FR 6561 , Mar. 4, 1987;  52 FR 39535 , Oct. 22, 1987;  59 FR 46930 , Sept. 13, 1994;  64 FR 50007 , Sept. 15,
   1999;  67 FR 5687 , Feb. 6, 2002]

§ 32.2321   Customer premises wiring.

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   (a) This account shall include all amounts transferred from the former
   Account 232, Station Connections, inside wiring subclass.

   (b)  Embedded  Customer Premises Wiring is that investment in customer
   premises  wiring equipment or inventory which was capitalized prior to
   October 1, 1984.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  52 FR 6561 , Mar. 4, 1987]

§ 32.2341   Large private branch exchanges.

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   (a) This account shall include the original cost, including the cost of
   installation, of multiple manual private branch exchanges and of dial system
   private branch exchanges of types designed to accommodate 100 or more lines
   or  which can normally be expanded to 100 or more lines, installed for
   customers' use. This account shall also include the original cost of other
   large  installations of station equipment: (1) Which do not constitute
   stations, (2) which require special or individualized treatment because of
   their complexity, special design, or other distinctive characteristics, and
   (3) for which individual or other specialized cost records are appropriate.
   (Note also Account 2311, Station Apparatus.)

   (b) The cost of intrabuilding network cables including their associated
   cross-connection boxes, terminals, distributing frames, etc., is chargeable
   to Account 2426, Intrabuilding Network Cable.

   (c) The cost of outside plant, whether or not on private property, used with
   intrabuilding, network cable shall be charged to the appropriate outside
   plant accounts.

   (d)–(e) [Reserved]

   (f) Private branch exchanges for company official use shall be included in
   Account 2123, Office Equipment.

   (g)  Embedded  CPE is that equipment or inventory which is tariffed or
   otherwise subject to the jurisdictional separations process as of January 1,
   1983. Inventories of large private branch exchanges equipment are included
   in Account 1220, Inventories.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  52 FR 6562 , Mar. 4, 1987;  52 FR 39535 , Oct. 22, 1987;  59 FR 46930 , Sept. 13, 1994]

§ 32.2351   Public telephone terminal equipment.

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   (a) This account shall include the original cost of coinless, coin-operated
   (including public and semi-public), credit card and pay telephone installed
   for use by the public.

   (b) This account shall also include the original cost of operating spares
   that are required to provide a continuity of service for public telephones.
   The operating spares shall not exceed six months supply in terms of turnover
   and be available to installers from locations in reasonable proximity to the
   location of the installed equipment.

   (c) The original cost of installing public telephone equipment shall not
   include  the  labor and minor materials costs of installing the public
   telephone equipment or premises wiring. These costs as well as the cost of
   replacing  a  public telephone shall be charged to Account 6351 Public
   Telephone Terminal Equipment Expense. The labor and minor materials costs of
   removal of public telephones will also be charged to Account 6351.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  52 FR 29019 , Aug. 5, 1987]

§ 32.2362   Other terminal equipment.

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   (a) This account shall include the original cost of other Non-CPE terminal
   equipment  not  specifically  provided for elsewhere and items such as
   specialized communications equipment provided to meet the needs of the
   disabled, over-voltage protection equipment, multiplexing equipment to
   deliver multiple channels to customers, etc.

   (b) Each company shall prepare a list of other terminal equipment which
   shall be used as its list of retirement units for this account, the cost of
   which when finally disposed of shall be credited to this account and charged
   to Account 3100, Accumulated Depreciation.

§ 32.2410   Cable and wire facilities.

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   This account shall be used by Class B companies to record the original cost
   of cable and wire facilities of the type and character required of Class A
   companies in Accounts 2411 through 2441.

§ 32.2411   Poles.

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   This account shall include the original cost of poles, crossarms, guys and
   other material used in the construction of pole lines and shall include the
   cost of towers when not associated with buildings. This account shall also
   include the cost of clearing pole line routes and of tree trimming but shall
   exclude the cost of maintaining previously cleared routes.

§ 32.2421   Aerial cable.

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   (a) This account shall include the original cost of aerial cable and of drop
   and block wires served by such cable or aerial wire as well as the cost of
   other  material  used in construction of such plant. Subsidiary record
   categories, as defined below, are to be maintained for nonmetallic aerial
   cable and metallic aerial cable.

   (1) Nonmetallic cable. This subsidiary record category shall include the
   original cost of optical fiber cable and other associated material used in
   constructing a physical path for the transmission of telecommunications
   signals.

   (2)  Metallic cable. This subsidiary record category shall include the
   original cost of single or paired conductor cable, wire and other associated
   material  used in constructing a physical path for the transmission of
   telecommunications signals.

   (b) The cost of permits and privileges for the construction of cable and
   wire  facilities shall be included in the account chargeable with such
   construction.

§ 32.2422   Underground cable.

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   (a)  This account shall include the original cost of underground cable
   installed in conduit and of other material used in the construction of such
   plant. Subsidiary record categories, as defined below, are to be maintained
   for nonmetallic underground cable and metallic underground cable.

   (1) Nonmetallic cable. This subsidiary record category shall include the
   original cost of optical fiber cable and other associated material used in
   constructing a physical path for the transmission of telecommunications
   signals.

   (2)  Metallic cable. This subsidiary record category shall include the
   original cost of single or paired conductor cable, wire and other associated
   material  used in constructing a physical path for the transmission of
   telecommunications signals.

   (b) The cost of pumping water out of manholes and of cleaning manholes and
   ducts in connection with construction work and the cost of permits and
   privileges  for the construction of cable and wire facilities shall be
   included in the account chargeable with such construction.

   (c) The cost of drop and block wires served by underground cable shall be
   included in Account 2423, Buried Cable.

   (d)  The  cost  of  cables leading from the main distributing frame or
   equivalent to central office equipment shall be included in the appropriate
   switching, transmission or other operations asset account.

§ 32.2423   Buried cable.

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   (a) This account shall include the original cost of buried cable as well as
   the cost of other material used in the construction of such plant. This
   account shall also include the cost of trenching for and burying cable run
   in conduit not classifiable to Account 2441, Conduit Systems. Subsidiary
   record categories, as defined below, are to be maintained for nonmetallic
   buried cable and metallic buried cable.

   (1) Nonmetallic cable. This subsidiary record category shall include the
   original cost of optical fiber cable and other associated material used in
   constructing a physical path for the transmission of telecommunications
   signals.

   (2)  Metallic cable. This subsidiary record category shall include the
   original cost of single or paired conductor cable, wire and other associated
   material  used in constructing a physical path for the transmission of
   telecommunications signals.

   (b) The cost of pumping water out of manholes and of cleaning manholes and
   ducts in connection with construction work and the cost of permits and
   privileges  for the construction of cable and wire facilities shall be
   included in the account chargeable with such construction.

§ 32.2424   Submarine & deep sea cable.

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   (a) This account shall include the original cost of submarine cable and deep
   sea  cable  and other material used in the construction of such plant.
   Subsidiary record categories, as defined below, are to be maintained for
   nonmetallic submarine and deep sea cable and metallic submarine and deep sea
   cable.

   (1) Nonmetallic cable. This subsidiary record category shall include the
   original cost of optical fiber cable and other associated material used in
   constructing a physical path for the transmission of telecommunications
   signals.

   (2)  Metallic cable. This subsidiary record category shall include the
   original cost of single or paired conductor cable, wire and other associated
   material  used in constructing a physical path for the transmission of
   telecommunications signals.

   (b) The cost of permits and privileges for the construction of cable and
   wire  facilities shall be included in the account chargeable with such
   construction.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5687 , Feb. 6, 2002]

§ 32.2426   Intrabuilding network cable.

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   (a) This account shall include the original cost of cables and wires located
   on the company's side of the demarcation point or standard network interface
   inside subscribers' buildings or between buildings on one customer's same
   premises. Intrabuilding network cables are used to distribute network access
   facilities to equipment rooms, cross-connection or other distribution points
   at which connection is made with customer premises wiring. Subsidiary record
   categories,  as  defined  below,  are to be maintained for nonmetallic
   intrabuilding network cable and metallic intrabuilding network cable.

   (1) Nonmetallic cable. This subsidiary record category shall include the
   original cost of optical fiber cable and other associated material used in
   constructing a physical path for the transmission of telecommunications
   signals.

   (2)  Metallic cable. This subsidiary record category shall include the
   original cost of single or paired conductor cable, wire and other associated
   material  used in constructing a physical path for the transmission of
   telecommunications signals.

   (b) The cost of pumping water out of manholes and of cleaning manholes and
   ducts in connection with construction work and the cost of permits and
   privileges  for the construction of cable and wire facilities shall be
   included in the account chargeable with such construction.

   (c) Intrabuilding network cable does not include the cost of cables or wires
   which are classifiable as network terminating wire, nor the cables or wires
   from the demarcation point or standard network interface to subscribers'
   stations.

§ 32.2431   Aerial wire.

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   (a) This account shall include the original cost of bare line wire and other
   material used in the construction of such plant.

   (b) The cost of permits and privileges for the construction of cable and
   wire  facilities shall be included in the account chargeable with such
   construction.

   (c) The cost of drop and block wires served by aerial wire shall be included
   in Account 2421, Aerial Cable.

§ 32.2441   Conduit systems.

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   (a)  This  account shall include the original cost of conduit, whether
   underground, in tunnels or on bridges, which is reusable in place. It shall
   also include the cost of opening trenches and of any repaving necessary in
   the construction of conduit plant.

   (b) The cost of pumping water out of manholes and of cleaning manholes and
   ducts in connection with construction work and the cost of permits and
   privileges  for the construction of cable and wire facilities shall be
   included in the account chargeable with such construction.

   (c) The cost of protective covering for buried cable shall be charged to
   Account 2423, Buried Cable, as appropriate, unless such protective covering
   is reusable in place. The amounts thus charged shall be included in the
   nonmetallic  buried  cable  or metallic buried cable subsidiary record
   category, as appropriate.

   (d) The cost of pipes or other protective covering for underground drop and
   block wires shall be included in Account 2421, Aerial Cable, or Account
   2423,  Buried Cable, as appropriate. The amounts thus charged shall be
   included in the nonmetallic or metallic subsidiary record category, as
   appropriate.

§ 32.2680   Amortizable tangible assets.

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   This  account  shall be used by Class B carriers to record amounts for
   property acquired under capital leases and the original cost of leasehold
   improvements of the type of character required of Class A companies in
   Accounts 2681 and 2682.

§ 32.2681   Capital leases.

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   (a) This account shall include all property acquired under a capital lease.
   A lease qualifies as a capital lease when one or more of the following
   criteria is met:

   (1)  By the end of the lease term, ownership of the leased property is
   transferred to the leasee.

   (2) The lease contains a bargain purchase option.

   (3) The lease term is substantially (75% or more) equal to the estimated
   useful life of the leased property. However, if the beginning of the lease
   term falls within the last 25% of the total estimated economic life of the
   leased property, including earlier years of use, this criterion shall not be
   used for purposes of classifying the lease.

   (4) At the inception of the lease, the present value of the minimum lease
   payments, excluding that portion of the payments representing executory
   costs to be paid by the lessor, including any profit thereon, equals or
   exceeds 90% or more of the fair value of the leased property. However, if
   the beginning of the lease term falls within the last 25% of the total
   estimated economic life of the leased property, including earlier years of
   use, this criterion shall not be used for purposes of classifying the lease.

   (b) All other leases are operating leases.

   (c) The amounts recorded in this account at the inception of a capital lease
   shall be equal to the original cost, if known, or to the present value not
   to exceed fair value, at the beginning of the lease term, of minimum lease
   payments during the lease term, excluding that portion of the payments
   representing executory costs to be paid by the lessor, together with any
   profit thereon.

§ 32.2682   Leasehold improvements.

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   (a) This account shall include the original cost of leasehold improvements
   made to telecommunications plant held under a capital or operating lease,
   which are subject to amortization treatment. This account shall also include
   those improvements which will revert to the lessor.

   (b)  Improvements  to  leased  telecommunications plant which are of a
   relatively minor cost or short life or for which the period of the lease is
   one year or less shall be charged to the account chargeable with the cost of
   repairs to such plant.

   (c) Amounts contained in this account shall be amortized over the term of
   the related lease. For Class A companies, except mid-sized incumbent local
   exchange carriers, the amortization associated with the costs recorded in
   the Leasehold improvement account will be credited directly to this asset
   account, leaving a balance representing the unamortized cost.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5687 , Feb. 6, 2002;  69 FR 53649 , Sept. 2, 2004]

§ 32.2690   Intangibles.

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   (a) This account shall include the cost of organizing and incorporating the
   company, the original cost of government franchises, the original cost of
   patent rights, and other intangible property having a life of more than one
   year  and  used  in  connection  with the company's telecommunications
   operations.

   (b) Class A companies, except mid-sized incumbent local exchange carriers,
   shall maintain subsidiary records for general purpose computer software and
   for network software. Subsidiary records for this account shall also include
   a description of each class of all other tangible property.

   (c) The cost of other intangible assets, not including software, having a
   life  of  one  year or less shall be charged directly to Account 6564,
   Amortization expense—intangible. Such intangibles acquired at small cost may
   also be charged to Account 6564, irrespective of their term of life. The
   cost of software having a life of one year or less shall be charged directly
   to the applicable expense account with which the software is associated.

   (d) The amortization associated with the costs recorded in the Intangibles
   account will be credited directly to this asset account, leaving a balance
   representing the unamortized cost.

   (e) This account shall not include any discounts on securities issued, nor
   shall it include costs incident to negotiating loans, selling bonds or other
   evidences  of  debt, or expenses in connection with the authorization,
   issuance, sale or resale of capital stock.

   (f) When charges are made to this account for expenses incurred in mergers,
   consolidations, or reorganizations, amounts previously included in this
   account on the books of the various companies concerned shall not be carried
   over.

   (g) Franchise taxes payable annually or more frequently shall be charged to
   Account 7240, Operating other taxes.

   (h) This account shall not include the cost of plant, material and supplies,
   or equipment furnished to municipalities or other governmental authorities
   when given other than as initial consideration for franchises or similar
   rights. (Note also Account 6720, General & administrative).

   (i) This account shall not include the original cost of easements, rights of
   way, and similar rights in land having a term of more than one year. Such
   amounts shall be recorded in Account 2111, Land, or in the appropriate
   outside  plant  account  (see  Accounts  2411 through 2441), or in the
   appropriate central office account (see Accounts 2211 through 2232).

   [ 67 FR 5687 , Feb. 6, 2002, as amended at  69 FR 53649 , Sept. 2, 2004]

§ 32.3000   Instructions for balance sheet accounts—Depreciation and
amortization.

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   (a) Depreciation and Amortization Subsidiary Records:

   (1) Subsidiary record categories shall be maintained for each class of
   depreciable telecommunications plant in Account 3100 for which there is a
   prescribed  depreciation  rate.  (See also §32.2000(g)(1)(iii) of this
   subpart.)

   (2) Subsidiary records shall be maintained for Accounts 2005, 2682, 2690,
   and 3410 in accordance with §32.2000(h)(4).

   (b) Depreciation and Amortization Accounts to be Maintained by Class A and
   Class B telephone companies, as indicated.
   Account title Class A
   account Class B
   account
   Depreciation and amortization:
   Accumulated depreciation 3100 3100
   Accumulated depreciation—Held for future telecommunications use 3200 3200
   Accumulated depreciation—Nonoperating 3300 3300
   Accumulated depreciation—Tangible 3400
   Accumulated depreciation—Capitalized leases 3410

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  59 FR 46930 , Sept. 13, 1994;  67 FR 5687 , Feb. 6, 2002;  69 FR 53649 , Sept. 2, 2004]

§ 32.3100   Accumulated depreciation.

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   (a) This account shall include the accumulated depreciation associated with
   the  investment contained in Account 2001, Telecommunications Plant in
   Service.

   (b) This account shall be credited with depreciation amounts concurrently
   charged to Account 6561, Depreciation expense—telecommunications plant in
   service. (Note also Account 3300, Accumulated depreciation—nonoperating.)

   (c) At the time of retirement of depreciable operating telecommunications
   plant, this account shall be charged with the original cost of the property
   retired plus the cost of removal and credited with the salvage value and any
   insurance proceeds recovered.

   (d) This account shall be credited with amounts charged to Account 1438,
   Deferred maintenance, retirements, and other deferred charges, as provided
   in §32.2000(g)(4) of this subpart. This account shall be credited with
   amounts charged to Account 6561 with respect to other than relatively minor
   losses in service values suffered through terminations of service when
   charges for such terminations are made to recover the losses.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5687 , Feb. 6, 2002;  69 FR 53649 , Sept. 2, 2004]

§ 32.3200   Accumulated depreciation—held for future telecommunications use.

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   (a) This account shall include the accumulated depreciation associated with
   the  investment  contained  in  Account 2002, Property Held for Future
   Telecommunications Use.

   (b) This account shall be credited with amounts concurrently charged to
   Account   6562,   Depreciation   expense—property   held   for  future
   telecommunications use.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5688 , Feb. 6, 2002;  69 FR 53649 , Sept. 2, 2004]

§ 32.3300   Accumulated depreciation—nonoperating.

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   (a) This account shall include the accumulated amortization and depreciation
   associated with the investment contained in Account 2006, Nonoperating
   Plant.

   (b)  This account shall be credited with amortization and depreciation
   amounts  concurrently charged to Account 7300, Nonoperating income and
   expense.

   (c)  When nonoperating plant not previously used in telecommunications
   service  is disposed of, this account shall be charged with the amount
   previously credited hereto with respect to such property and the book cost
   of the property so retired less the amount chargeable to this account and
   less the value of the salvage recovered or the proceeds from the sale of the
   property shall be included in Account 7300, Nonoperating income and expense.
   In case the property had been used in telecommunications service previous to
   its inclusion in Account 2006, Nonoperating Plant, the amount accrued for
   depreciation thereon after its retirement from telecommunications service
   shall be charged to this account and credited to Account 3100, Accumulated
   depreciation, and the accounting for its retirement from Account 2006 shall
   be in accordance with that applicable to telecommunications plant retired.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  59 FR 46930 , Sept. 13, 1994;  67 FR 5688 , Feb. 6, 2002]

§ 32.3400   Accumulated amortization—tangible.

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   (a) This account shall be used by Class B companies and shall include:

   (1) the accumulated amortization associated with the investment contained in
   Account 2681, Capital leases.

   (2) the accumulated amortization associated with the investment contained in
   Account 2682, Leasehold improvements.

   (b) This account shall be credited with amounts for the amortization of
   capital leases and leasehold improvements concurrently charged to Account
   6563, Amortization expense—tangible. (Note also Account 3300, Accumulated
   depreciation—nonoperating.)

   (c)  When any item carried in Account 2681 or Account 2682 is sold, is
   relinquished, or is otherwise retired from service, this account shall be
   charged with the cost of the retired item. Remaining amounts associated with
   the  item shall be debited to Account 7100, Other operating income and
   expenses, or Account 7300, Nonoperating income and expense, as appropriate.

   [ 69 FR 53649 , Sept. 2, 2004]

§ 32.3410   Accumulated amortization—capitalized leases.

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   (a) This account shall include the accumulated amortization associated with
   the investment contained in Account 2681, Capital Leases.

   (b) This account shall be credited with amounts for the amortization of
   capital  leases  concurrently  charged  to  Account 6563, Amortization
   expense—tangible.     (Note    also    Account    3300,    Accumulated
   depreciation—nonoperating.)

   (c) When any item carried in Account 2681 is sold, is relinquished, or is
   otherwise retired from service, this account shall be charged with the cost
   of the retired item. Remaining amounts associated with the item shall be
   debited to Account 7100, Other operating income and expenses, or Account
   7300, Nonoperating income and expense, as appropriate.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5688 , Feb. 6, 2002;  69 FR 53649 , Sept. 2, 2004]

§ 32.3999   Instructions for balance sheet accounts—liabilities and
stockholders' equity.

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   Liabilities and Stockholders' Equity Accounts To Be Maintained by Class A
   and Class B Telephone Companies
   Account title Class A
   account Class B
   account
   Current liabilities:
   Current accounts and notes payable 4000 4000
   Customer's Deposits 4040 4040
   Income taxes—accrued 4070 4070
   Other taxes—accrued 4080 4080
   Net Current Deferred Nonoperating Income Taxes 4100 4100
   Net Current Deferred Nonoperating Income Taxes 4110 4110
   Other current liabilities 4130 4130
   Long-term debt:
   Long Term debt and Funded debt 4200 4200
   Other liabilities and deferred credits:
   Other liabilities and deferred credits 4300 4300
   Unamortized operating investment tax credits—net 4320 4320
   Unamortized nonoperating investment tax credits—net 4330 4330
   Net noncurrent deferred operating income taxes 4340 4340
   Net deferred tax liability adjustments 4341 4341
   Net noncurrent deferred nonoperating income taxes 4350 4350
   Deferred tax regulatory adjustments—net 4361 4361
   Other jurisdictional liabilities and deferred credits—net 4370 4370
   Stockholder's equity:
   Capital stock 4510 4510
   Additional paid-in capital 4520 4520
   Treasury stock 4530 4530
   Other capital 4540 4540
   Retained earnings 4550 4550

   [ 67 FR 5688 , Feb. 6, 2002]

§ 32.4000   Current accounts and notes payable.

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   (a) This account shall include:(1) All amounts currently due to others for
   recurring trade obligations, and not provided for in other accounts, such as
   those  for  traffic  settlements,  material  and  supplies, repairs to
   telecommunications plant, matured rents, and interest payable under monthly
   settlements on short-term loans, advances, and open accounts. It shall also
   include amounts of taxes payable that have been withheld from employees'
   salaries.

   (2) Accounts payable arising from sharing of revenues.

   (3) The face amount of notes, drafts, and other evidences of indebtedness
   issued or assumed by the company (except interest coupons) which are payable
   on demand or not more than one year or less from date of issue.

   (b) If any part of an obligation, otherwise includable in this account
   matures more than one year from date of issue, it shall be included in
   Account 4200, Long term debt and funded debt, or other appropriate account.

   (c) The records supporting the entries to this account shall be kept so that
   the company can furnish complete details as to each note, when it is issued,
   the consideration received, and when it is payable.

   (d) Subsidiary record categories shall be maintained for this account in
   order that the company may separately report the amounts contained herein
   that  relate  to  nonaffiliates and affiliates. Such subsidiary record
   categories shall be reported as required by part 43 of this chapter.

   [ 67 FR 5688 , Feb. 6, 2002]

§ 32.4040   Customers' deposits.

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   (a) This account shall include the amount of cash deposited with the company
   by customers as security for the payment for telecommunications service.

   (b)  Advance  payments  made  by  prospective  customers  prior to the
   establishment of service shall be credited to Account 4130, Other current
   liabilities.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5689 , Feb. 6, 2002]

§ 32.4070   Income taxes—accrued.

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   (a) This account shall be credited or charged and the following accounts
   shall be charged or credited with the offsetting amount of current year
   income  taxes  (Federal, state and local) accrued during the period or
   adjustments to prior accruals: 7220 Operating Federal Income Taxes, 7230
   Operating  State and Local Income Taxes, 7400 Nonoperating Taxes, 7600
   Extraordinary Items.

   (b) If significant, current year income taxes paid in advance shall be
   reclassified to Account 1280, Prepayments.

   [ 67 FR 5689 , Feb. 6, 2002]

§ 32.4080   Other taxes—accrued.

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   (a) This account shall be credited or charged and Account 7240, Operating
   Other Taxes, or 7400, Nonoperating Taxes, or, for payroll related costs, the
   appropriate expense accounts shall be charged or credited for all taxes,
   other than Federal, State and local income taxes, accrued or adjusted for
   previous accruals during the period. Among the taxes includable in this
   account are property, gross receipts, franchise, capital stock, social
   security and unemployment taxes.

   (b) Taxes paid in advance of the period in which they are chargeable to
   income shall be included in the prepaid taxes Account 1280, Prepayments, or
   1410, Other Noncurrent Assets, as appropriate.

   [ 67 FR 5689 , Feb. 6, 2002]

§ 32.4100   Net current deferred operating income taxes.

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   (a) This account shall include the balance of income tax expense related to
   current items from regulated operations which have been deferred to later
   periods  as  a  result  of the normalized method of accounting for tax
   differentials authorized by this Commission and not provided for elsewhere.

   (b) As regulated assets or liabilities which generated the deferred income
   tax are reclassified from long-term or noncurrent status to current, the
   appropriate deferred income tax shall be reclassified from Account 4340, Net
   Noncurrent Deferred Operating Income Taxes, to this account.

   (c) This account shall be debited or credited with the amount being debited
   or  credited  to Account 7250, Provision For Deferred Operating Income
   Taxes—Net, in accordance with that account's description and §32.22 of
   subpart B.

   (d) The classification of deferred income taxes as current or noncurrent
   shall follow the classification of the asset or liability that gave rise to
   the  deferred  income  tax. If there is no related asset or liability,
   classification shall be based on the expected turnaround of the temporary
   differences.

   (e) Subsidiary record categories shall be maintained in order that the
   company may separately report the amounts contained herein that are property
   related and those that are nonproperty related. Such subsidiary record
   categories shall be reported as required by Part 43 of this Commission's
   Rules and Regulations.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  59 FR 9419 , Feb. 28, 1994]

§ 32.4110   Net current deferred nonoperating income taxes.

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   (a) This account shall include the balance of income tax expense resulting
   from comprehensive interpreted tax allocation which has been deferred to
   later periods.

   (b) As other assets or liabilities which generated the deferred income tax
   are  reclassified  from long-term or noncurrent status to current, the
   appropriate deferred income tax shall be reclassified from Account 4350, Net
   Noncurrent Deferred Nonoperating Income Taxes, to this account.

   (c) This account shall be debited or credited with the amount being credited
   or debited to Account 7400, Nonoperating taxes, in accordance with that
   account's description and §32.22.

   (d)  This  account  shall also include the balance of the income taxes
   (Federal, state and local) related to current extraordinary items which have
   been deferred to later periods resulting from comprehensive interperiod tax
   allocation.

   (e)  As the extraordinary item which generated the deferred income tax
   becomes current, the appropriate deferred income tax shall be reclassified
   from Account 4350, Net Noncurrent Deferred Nonoperating Income Taxes, to
   this account.

   (f) This account shall be debited or credited with the amount being credited
   and debited to Account 7600, Extraordinary Items.

   (g) The classification of deferred income taxes as current or noncurrent
   shall follow the classification of the asset or liability that gave rise to
   deferred  income  tax.  If  there  is  no  related asset or liability,
   classification shall be based on the expected turnaround of the temporary
   differences.

   (h) Subsidiary record categories shall be maintained in order that the
   company may separately report the amounts contained herein that are property
   related and those that are nonproperty related. Such subsidiary record
   categories shall be reported as required by part 43 of this Commission's
   Rules and Regulations.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  59 FR 9419 , Feb. 28, 1994;  67 FR 5689 , Feb. 6, 2002]

§ 32.4130   Other current liabilities.

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   This account shall include:

   (a) The amount of advance billing creditable to revenue accounts in future
   months; also advance payments made by prospective customers prior to the
   establishment of service. Amounts included in this account shall be credited
   to the appropriate revenue accounts in the months in which the service is
   rendered or cleared from this account as refunds are made.

   (b) The amount (including any obligations for premiums) of long-term debt
   matured and unpaid without any specific agreement for extension of maturity,
   including unpresented bonds drawn for redemption through the operation of
   sinking and redemption fund agreements.

   (c) The current portion of obligations applicable to property obtained under
   capital leases.

   (d) The amount of wages, compensated absences, interest on indebtedness of
   the company, dividends on capital stock, and rents accrued to the date for
   which the balance sheet is made, but not payable until after that date.
   Accruals shall be maintained so as to show separately the amount and nature
   of the items accrued to the date of the balance sheet.

   (e) Matured rents, dividends, interest payable under monthly settlements on
   short-term loans, advances, and open accounts shall be included in Account
   4000.

   (f) All other liabilities of current character which are not included in
   Account 4000 through 4110.

   [ 67 FR 5689 , Feb. 6, 2002]

§ 32.4200   Long term debt and funded debt.

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   (a) This account shall include:

   (1) The total face amount of unmatured debt maturing more than one year from
   date of issue, issued by the company and not retired, and the total face
   amount of similar unmatured debt of other companies, the payment of which
   has been assumed by the company, including funded debt the maturity of which
   has been extended by specific agreement. This account shall also include
   such  items  as  mortgage bonds, collateral trust bonds, income bonds,
   convertible debt, debt securities with detachable warrants and other similar
   obligations maturing more than one year from date of issue.

   (2) The premium associated with all classes of long-term debt. Premium, as
   applied to securities issued or assumed by the company, means the excess of
   the current money value received at their sale over the sum of their book or
   face amount and interest or dividends accrued at the date of the sale.

   (3) The discount associated with all classes of long-term debt. Discount, as
   applied to securities issued or assumed by the company, means the excess of
   the book or face amount of the securities plus interest or dividends accrued
   at the date of the sale over the current money value of the consideration
   received at their sale.

   (4) The face amount of debt reacquired prior to maturity that has not been
   retired. Gain or loss shall be recognized at the time of reacquisition by
   credits or charges to Account 7300, Nonoperating income and expense, except
   that  material gains or losses shall be treated as extraordinary. (See
   Account 7600, Extraordinary items.)

   (5) The noncurrent portion of obligations applicable to property obtained
   under  capital  leases. Amounts subject to current settlement shall be
   included in Account 4130, Other current liabilities.

   (6) The amount of advance from affiliated companies. Amounts due affiliated
   companies which are subject to current settlement shall be included in
   Account 4000.

   (7) Investment advances, including those represented by notes.

   (8) Long-term debt not provided for elsewhere.

   (b) Subsidiary records shall be maintained for each issue. The subsidiary
   records shall identify the premium or discount attributable to each issue.

   (c) Premiums and discounts on long-term debt recorded in this account shall
   be amortized monthly by the interest method and charged or credited, as
   appropriate, to Account 7500, Interest and related items.

   (d) Debt securities with detachable warrants shall be accounted for in
   accordance with generally accepted accounting principles.

   (e) Securities maturing in one year or less, including securities maturing
   serially, shall be included in Account 4130, Other current liabilities.

   [ 67 FR 5689 , Feb. 6, 2002]

§ 32.4300   Other long-term liabilities and deferred credits.

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   (a) This account shall include amounts accrued to provide for such items as
   unfunded pensions (if actuarially determined), death benefits, deferred
   compensation  costs  and  other long-term liabilities not provided for
   elsewhere. Subsidiary records shall be maintained to identify the nature of
   these items.

   (b)  This account shall include the amount of all deferred credits not
   provided  for  elsewhere,  such as amounts awaiting adjustment between
   accounts; and revenue, expense, and income items in suspense.

   [ 67 FR 5690 , Feb. 6, 2002]

§ 32.4320   Unamortized operating investment tax credits—net.

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   (a) This account shall be credited and Account 7210, Operating Investment
   Tax Credits—Net, should be debited with investment tax credits generated
   from  qualified expenditures related to regulated operations which the
   company defers rather than recognizes currently in income.

   (b)  This  account  shall  be debited and Account 7210 credited with a
   proportionate amount determined in relation to the period of time used for
   computing book depreciation on the property to which the tax credit relates.

§ 32.4330   Unamortized nonoperating investment tax credits—net.

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   (a) This account shall be credited and Account 7400, Nonoperating Taxes,
   shall  be debited with investment tax credits generated from qualified
   expenditures related to other operations which the company has elected to
   defer rather than recognize currently in income.

   (b)  This  account  shall  be debited and Account 7400 credited with a
   proportionate amount determined in relation to the useful book life of the
   property to which the tax credit relates.

   [ 67 FR 5690 , Feb. 6, 2002]

§ 32.4340   Net noncurrent deferred operating income taxes.

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   (a) This account shall include the balance of income tax expense related to
   noncurrent items from regulated operations which have been deferred to later
   periods as a result of comprehensive interperiod tax allocation related to
   temporary differences that arise from regulated operations.

   (b) This account shall be credited or debited, as appropriate, and Account
   7250, Provision for Deferred Operating Income Taxes—Net, shall reflect the
   offset for the tax effect of revenues and expenses from regulated operations
   which have been included in the determination of taxable income, but which
   will not be included in the determination of book income or for the tax
   effect of revenues and expenses from regulated operations which have been
   included in the determination of book income prior to the inclusion in the
   determination of taxable income.

   (c) As regulated assets or liabilities which generated the prepaid income
   tax or deferred income tax are reclassified from long-term or noncurrent
   status to current status, the appropriate deferred income tax shall be
   reclassified  from  this account to Account 4100, Net Current Deferred
   Operating Income Taxes.

   (d) The classification of deferred income taxes as current or noncurrent
   shall follow the classification of the asset or liability that gave rise to
   the  deferred  income  tax. If there is no related asset or liability,
   classification shall be based on the expected turnaround of the temporary
   difference.

   (e) Subsidiary record categories shall be maintained in order that the
   company may separately report the amounts contained herein that are property
   related and those that are nonproperty related. Such subsidiary record
   categories shall be reported as required by Part 43 of this Commission's
   Rules and Regulations.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  59 FR 9419 , Feb. 28, 1994]

§ 32.4341   Net deferred tax liability adjustments.

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   (a) This account shall include the portion of deferred income tax charges
   and  credits  pertaining  to  Account 32.4361, Deferred tax regulatory
   adjustments—net.

   (b) This account shall be used to record adjustments to the accumulated
   deferred tax liabilities recorded in Accounts 4100 and 4340 for:

   (1)  Tax  effects  of  temporary  differences  accounted for under the
   flow-through method or treated as permanent differences.

   (2) Reclassification attributable to changes in tax rates (Federal, state
   and local). As tax rates increase or decrease, the offsetting debit or
   credit will be recorded in Account 4361 as required by paragraph (a) of this
   section.

   (3) The tax effects of carryforward net operating losses and carryforward
   investment tax credits expected to reduce future taxes payable that are
   reported in published financial statements.

   (4) Reversals of the tax effects of carryforward net operating losses and
   carryforward investment tax credits previously recorded in this account at
   the time they become recognized as reductions in current taxable income and
   current taxes payable on tax returns.

   (c)  This  account shall be exempt from the vintage year detail record
   requirements of §32.22(e)(2).

   [ 59 FR 9419 , Feb. 28, 1994, as amended at  67 FR 5690 , Feb. 6, 2002]

§ 32.4350   Net noncurrent deferred nonoperating income taxes.

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   (a) This account shall include the balance of income tax expense (Federal,
   state, and local) that has been deferred to later periods as a result of
   comprehensive interperiod allocation related to nonoperating differences.

   (b) This account shall be credited or debited, as appropriate, and Account
   7400, Nonoperating Taxes, shall reflect the offset for the tax effect of
   revenues from other operations and extraordinary items and nonoperating
   expenses which have been included in the determination of taxable income,
   but which will not be included in the determination of book income or for
   the  tax  effect  of nonoperating expenses and extraordinary items and
   nonoperating income which have been included in the determination of book
   income prior to the inclusion in the determination of taxable income.

   (c) As other assets or liabilities which generated the prepaid income tax or
   deferred income tax are reclassified from long-term or non-current status to
   current status, the appropriate deferred income tax shall be reclassified
   from this account to account 4110, Net Current Deferred Nonoperating Income
   Taxes.

   (d) This account shall also include the balance of the income tax effect
   (Federal, State and local) related to noncurrent extraordinary items which
   have  been included in the determination of taxable income in a period
   different from when it is included in the determination of book income, that
   is, more than one year.

   (e)  This  account shall be charged or credited with the contra amount
   recorded to Account 7600, Extraordinary items, in accordance with §32.22.

   (f)  As the extraordinary item which generated the deferred income tax
   becomes current, the appropriate deferred income tax shall be reclassified
   from this account to Account 4110, Net Current Deferred Nonoperating Income
   Taxes.

   (g) The classification of deferred income taxes as current or noncurrent
   shall follow the classification of the asset or liability that gave rise to
   the  deferred  income  tax. If there is no related asset or liability,
   classification shall be based on the expected turnaround of the temporary
   difference.

   (h) Subsidiary record categories shall be maintained in order that the
   company may separately report the amounts contained herein that are property
   related and those that are nonproperty related. Such subsidiary record
   categories shall be reported as required by part 43 of this Commission's
   Rules and Regulations.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  59 FR 9419 , Feb. 28, 1994;  67 FR 5690 , Feb. 6, 2002]

§ 32.4361   Deferred tax regulatory adjustments—net.

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   (a) This account shall include amounts of probable future revenue for the
   recovery of future increases in taxes payable and amounts of probable future
   revenue reductions attributable to future decreases in taxes payable. As
   reductions or reversals occur, amounts recorded in this account shall be
   reduced or increased, with a contra entry being made to Account 4341, Net
   deferred tax liability adjustments.

   (b) This account shall also be adjusted for the impact of prospective tax
   rate changes on the deferred tax liability for those temporary differences
   underlying its existing balance.

   [ 67 FR 5690 , Feb. 6, 2002]

§ 32.4370   Other jurisdictional liabilities and deferred credits—net.

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   This account shall include the cumulative impact on liabilities and deferred
   credits of the jurisdictional ratemaking practices which vary from those of
   this Commission. All entries recorded in this account shall be recorded net
   of any applicable income tax effects and shall be supported by appropriate
   subsidiary records where necessary as provided for in §32.13 of subpart B.

§ 32.4510   Capital stock.

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   (a) This account shall include the par value, stated amount, or in the case
   of  no-par  stock,  the  amount  received for capital stock issued and
   outstanding.

   (b) Subsidiary records shall be maintained so as to show separately each
   class of stock.

   (c) This account shall be charged with the book amount of any stock retired.

§ 32.4520   Additional paid-in capital.

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   (a) This account shall include the difference between the net proceeds
   (including discount, premium and stock issuance expense) received from the
   issuance of capital stock and the amount includable in Account 4510, Capital
   Stock, unless such difference results in a debit balance for that class of
   stock, in which case the amount shall be charged to Account 4550, Retained
   Earnings.

   (b) This account shall also include gains arising from the retirement and
   cancellation of capital stock. Losses from the retirement and cancellation
   of capital stock shall be charged to this account to the extent that there
   exist credits in this account for the same class of stock; otherwise to
   Account 4550.

§ 32.4530   Treasury stock.

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   This account shall include the cost of the company's own capital stock which
   has been issued and subsequently reacquired but not retired or resold.

§ 32.4540   Other capital.

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   This  account shall include amounts which are credits arising from the
   donation by stockholders of the company's capital stock, capital recorded
   upon the reorganization or recapitalization of the company and temporary
   declines in the value of marketable securities held for investment purposes.
   (See also Account 1410, Other noncurrent assets).

   [ 67 FR 5690 , Feb. 6, 2002]

§ 32.4550   Retained earnings.

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   (a)  This  account shall include the undistributed balance of retained
   earnings derived from the operations of the company and from all other
   transactions not includable in the other accounts appropriate for inclusion
   of stockholders' equity.

   (b) Subsidiary records shall be maintained wherein are recorded all entries
   to retained earnings during the year such that the detail of the entries may
   be disclosed to the Commission.

Subpart D—Instructions For Revenue Accounts

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§ 32.4999   General.

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   (a)  Purpose of revenue accounts. The revenue accounts are intended to
   include the actual cash inflows (or equivalents) that have or will occur as
   a result of the company's ongoing major or central operations during the
   period. They will include the revenues which arise from furnishing regulated
   telecommunications services to others, from directory advertising, rentals
   of telecommunications assets and from providing other services which are
   directly associated with the provision of regulated telecommunications
   services.

   (b) Deductions from revenue. Corrections of overcharges, authorized refunds
   of overcollections previously credited to revenue, authorized refunds and
   adjustments on account of failure in service, and other corrections shall be
   charged  to  the  revenue account previously credited with the amounts
   involved.

   (c)  Commissions.  Commissions paid to others or employees in place of
   compensation or salaries for services rendered, such as public telephone
   commissions, shall be charged to Account 6623, Customer services, and not to
   the revenue accounts. Other commissions shall be charged to the appropriate
   expense accounts.

   (d) Revenue recognition. Credits shall be made to the appropriate revenue
   accounts  when such revenue is actually earned. When the billing cycle
   encompasses more than one accounting period, adjustments are necessary to
   properly recognize the revenue applicable to the current accounting period
   under report. Revenues recorded under the terms of two-tier contracts or
   other  variable  payment  plans  should be deferred, if necessary, and
   recognized ratably with expenses over the terms of the related contract. Any
   amounts  deferred  shall  be credited to Account 4300, Other long-term
   liabilities and deferred credits.

   (e) Contractual arrangements. Charges and credits resulting from activities
   associated with the provisions of regulated telecommunications services
   shall be recorded in a manner consistent with the nature of the underlying
   contractual arrangements. The charges and credits resulting from expense
   sharing or apportionment arrangements associated with the provision of
   regulated telecommunications services shall be recorded in the detailed
   regulated accounts. Charges and credits resulting from revenue settlement
   agreements  or  other revenue pooling arrangements associated with the
   provision of regulated telecommunications services shall be included in the
   appropriate revenue accounts. Those charges and credits resulting from
   contractual revenue pooling and/or sharing agreements shall be recorded in
   each prescribed revenue account and prescribed subsidiary record categories
   thereof to the extent that each is separately identifiable in the settlement
   process.  It  is  not intended that settlement amounts be allocated or
   generally spread to the individual revenue accounts where they are not
   separately identifiable in the settlement process. When the settlement
   amounts are not identifiable by a revenue account they shall be recorded in
   Account 5060, Other basic area revenue, 5105, Long distance message revenue,
   or 5200, Miscellaneous revenue, as appropriate.

   (f) Subsidiary records—jurisdictional subdivisions and interconnection.
   Subsidiary record categories shall be maintained in order that the company
   may  separately  report  revenues  derived  from charges imposed under
   intrastate, interstate and international tariff filings. Class A carriers
   shall also maintain subsidiary record categories in order that the companies
   may separately report interconnection revenues derived from the following
   categories: Unbundled network element revenues, Resale revenues, Reciprocal
   compensation revenues, and Other interconnection revenues. Such subsidiary
   record  categories  shall  be  reported as required by part 43 of this
   Commission's Rules and Regulations.

   (g) Structure of revenue accounts. (1) The revenue section of the system of
   accounts shall be organized by revenue group summary account, account and
   subsidiary record category (if required).

   (2) The revenue section of this system of accounts shall be comprised of six
   major  groups—Local Network Services Revenues, Network Access Services
   Revenues, Long Distance Network Services Revenues, Miscellaneous Revenues,
   Nonregulated revenues, and Uncollectible Revenues, which shall be considered
   as a revenue group for the purposes of the construction of the system.

   (3) Accounts shall be maintained as prescribed in this Section subject to
   the  conditions  described  in  section 32.13 of subpart B. In certain
   instances, subsidiary record categories may be required below the account
   level by this system of accounts or by Commission order.

   (h)  Local  Network Services revenues. Local Network Services revenues
   (Accounts  5001  through 5060) shall include revenues derived from the
   provision of service and equipment entirely within the basic service area.
   That  area  is defined as the normal boundaries for local calling plus
   Extended Area Service (EAS) boundaries as they apply to that service. It
   includes revenues derived from both local private network service and local
   public  network  services as well as from customer premises facilities
   services. Local revenues include associated charges such as one-time service
   connection  or termination charges and secondary features such as call
   waiting.

   (i)  Network  Access  revenues.  (1) Network Access revenues (Accounts
   5081–5083) shall include revenues derived from the provision of exchange
   access  services  to  an  interexchange  carrier  or to an end user of
   telecommunications services beyond the exchange carrier's network.

   (2) Billing and collections service provided under exchange access tariffs
   shall be included in the Miscellaneous Revenues Group.

   (j) Long Distance Network Service revenues. Long Distance Network Service
   revenues shall include revenues derived from the provision of services
   beyond the basic service area, whether message or flat-rate and including
   public network switching as well as private.

   (k)  Miscellaneous revenues. Miscellaneous revenues are those revenues
   derived from the provision of regulated products and services provided under
   tariff or contract but not contained elsewhere. They shall also include
   operating  revenue  derived  from activities performed incident to the
   company's tariffed telecommunications operations which, though non-tariffed,
   are included in the regulatory process.

   (l) Nonregulated revenues. The nonregulated revenue account shall be used
   for nonregulated operating revenues when a nonregulated activity involves
   the common or joint use of assets or resources in the provision of regulated
   and nonregulated products or services as required in §32.23(c) of this
   subpart. Revenues from nontariffed activities offered incidental to tariffed
   services may be accounted for as regulated revenues, provided the activities
   are outgrowths of regulated operations and the revenues do not exceed, in
   the aggregate, one percent of total revenues for three consecutive years.
   Such activities must be listed in the Commission-approved Cost Allocation
   Manual for any company required to file a Cost Allocation Manual.

   (m) Uncollectible revenues . Uncollectible revenues shall include amounts
   originally credited to the revenue accounts which have proved impracticable
   of collection.

   (n) Revenue accounts to be maintained. 
   Account title Class A
   account Class B
   account
   Local network services revenues:
   Basic local service revenue 5000
   Basic area revenue 5001
   Private line revenue 5040
   Other basic area revenue 5060
   Network access service revenues:
   End user revenue 5081 5081
   Switched access revenue 5082 5082
   Special access revenue 5083 5083
   Long distance network services revenues:
   Long distance message revenue 5100 5100
   Miscellaneous revenues:
   Miscellaneous revenue 5200 5200
   Directory revenue 5230
   Nonregulated revenues:
   Nonregulated operating revenue 5280 5280
   Uncollectible revenues:
   Uncollectible revenue 5300 5300

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  53 FR 49322 , Dec. 7, 1988;  59 FR 46930 , Sept. 13, 1994;  64 FR 50008 , Sept. 15, 1999;  67 FR 5690 , Feb. 6,
   2002;  69 FR 53649 , Sept. 2, 2004]

§ 32.5000   Basic local service revenue.

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   Class B telephone companies shall use this account for revenues of the type
   and character required of Class A companies in Accounts 5001 through 5060.

   [ 67 FR 5691 , Feb. 6, 2002]

§ 32.5001   Basic area revenue.

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   (a) This account shall include revenue derived from the provision of the
   following:

   (1) Basic area message services such as flat rate services and measured
   services.  Included is revenue derived from non-optional extended area
   services. Also included is revenue derived from the billed or guaranteed
   portion of semi-public services.

   (2) Optional extended area service.

   (3) Cellular mobile telecommunications systems connected to the public
   switched network placed between mobile units and other stations within the
   mobile service area.

   (4)  General  radio telecommunications systems connected to the public
   switched network placed between mobile units and other stations within the
   mobile service area, as well as revenue from mobile radio paging, mobile
   dispatching, and signaling services.

   (b) Revenue derived from charges for nonpublished number or additional and
   boldfaced listings in the alphabetical section of the company's telephone
   directories shall be included in account 5230, Directory revenue.

   (c) Revenue from private mobile telephone services which do not have access
   to  the  public  switched  network  shall be included in Account 5200,
   Miscellaneous revenue.

   [ 67 FR 5691 , Feb. 6, 2002, as amended at  69 FR 53650 , Sept. 2, 2004]

§ 32.5002   Optional extended area revenue.

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   This account shall include total revenue derived from the provision of
   optional extended area service.

§ 32.5003   Cellular mobile revenue.

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   This account shall include message revenue derived from cellular mobile
   telecommunications systems connected to the public switched network placed
   between mobile units and other stations within the mobile service area.

§ 32.5040   Private line revenue.

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   This account shall include revenue derived from local services that involve
   dedicated  circuits, private switching arrangements, and/or predefined
   transmission   paths,  whether  virtual  or  physical,  which  provide
   communications   between   specific  locations  (e.g.,  point-to-point
   communications. It includes revenue from subvoice grade, voice grade, audio
   and video program grade, digital transmission and local private network
   switching as well as the revenue from administrative and operational support
   services associated with private network services and facilities, e.g.,
   charges for company-directed testing, expedited installation, and service
   restoration priority.

§ 32.5060   Other basic area revenue.

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   This account shall include:

   (a) Revenue from the provision of secondary features which are integrated
   with the telecommunications network such as call forwarding, call waiting
   and touch-tone line service. Also included is revenue derived from the
   provision  of  public  announcement and other record message services,
   directory assistance and other call completion services (excluding operator
   assisted basic long distance calls), as well as revenue derived from central
   office  related  service connection and termination charges, and other
   non-premise  customer  specific charges associated with public network
   services. This account shall also include local revenue not provided for in
   other accounts.

   (b) Charges and credits resulting from contractual revenue pooling and/or
   sharing agreements for tariffed local network services only when they are
   not separately identifiable by local network services revenue accounts in
   the settlement process. (See also §32.4999(e)). To the extent that the
   charges and credits resulting from a settlement process can be identified by
   Local  Network  Services Revenue account they shall be recorded in the
   applicable account.

   (c) Revenue derived from tariffed information origination/termination plant.
   Included is revenue derived from the provision under leasing arrangements of
   tariffed customer premises equipment (CPE), terminal equipment, station
   apparatus  and  large  private  branch  exchanges  as well as tariffed
   nonrecurring charges related solely to station apparatus. Also included are
   all tariffed charges for customer premises activities and facilities not
   related solely to station apparatus.

   [ 67 FR 5691 , Feb. 6, 2002]

§ 32.5081   End user revenue.

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   (a) This account shall contain federally and state tariffed monthly flat
   rate charge assessed upon end users.

   (b) Subsidiary record categories shall be maintained in order that the
   company may separately report amounts related to federal and state tariffed
   charges.

   [ 67 FR 5692 , Feb. 6, 2002]

§ 32.5082   Switched access revenue.

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   (a) This account shall consist of federally and state tariffed charges
   assessed to interexchange carriers for access to local exchange facilities.

   (b) Subsidiary record categories shall be maintained in order that the
   company may separately report the amounts contained herein that relate to
   limited  pay  telephone,  carrier common line, line termination, local
   switching, intercept, information, common transport and dedicated transport.
   The subsidiary records shall also separately show the federal and state
   tariffed charges. Such subsidiary record categories shall be reported as
   required by part 43 of this chapter.

   [ 67 FR 5692 , Feb. 6, 2002]

§ 32.5083   Special access revenue.

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   (a) This account shall include all federally and state tariffed charges
   assessed for other than end user or switched access charges referred to in
   Account 5081, End user revenue, and Account 5082, Switched access revenue.

   (b) Subsidiary record categories shall be maintained in order that the
   company may separately report the amounts contained herein that relate to
   recurring charges, nonrecurring charges and surcharges. The subsidiary
   records shall also separately show the federal and state tariffed charges.
   Such subsidiary record categories shall be reported as required by part 43
   of this chapter.

   [ 67 FR 5692 , Feb. 6, 2002]

§ 32.5100   Long distance message revenue.

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   This  account shall include revenue derived from message services that
   terminate beyond the basic service area of the originating wire center and
   are individually priced. This includes those message services which utilize
   the public long distance switching network and the basic subscriber access
   line. It also includes those long distance calls placed from mobile and
   public telephones, as well as any charges for operator assistance or special
   billing directly related to the completion of a specific call. This account
   shall also include revenue derived from individually priced message services
   offered under calling plans (discounted long distance) which do not utilize
   dedicated access lines, as well as those priced at the basic long distance
   rates where a discounted toll charge is on a per message basis. Any revenue
   derived from monthly or one-time charges for obtaining calling plan services
   shall be included in this account. This account includes revenue derived
   from the following services:

   (a) Long distance services which permit unidirectional calls to a subscriber
   from specified services areas (multipoint-to-point service). These calls
   require the use of dedicated access lines connecting a subscriber's premises
   and a designated central office. These dedicated access lines are generally
   separate from those required for the subscriber to place outward calls. The
   call is billed to the subscriber even though it is generally initiated by
   the subscriber's customer or correspondent.

   (b) Long distance services which permit the subscriber to place telephone
   calls   from   one   location   to   other   specified  service  areas
   (point-to-multipoint service). These calls are completed without operator
   assistance and require the use of a dedicated access line. The dedicated
   access line is generally separate from those required for inward message
   services and cannot be used to place calls within the basic service area or
   calls outside the selected service areas. Outward calls are screened and
   blocked to determine whether the calls are within an authorized service
   area.

   (c) Services extending beyond the basic service area that involve dedicated
   circuits, private switching arrangements, and/or predefined transmission
   paths, whether virtual or physical, which provide communications between
   specific locations (e.g., point-to-point communications). Service connection
   charges, termination charges, rearrangements and changes, etc., shall be
   included in this account. Revenue derived from associated administrative and
   operational support services shall also be included in this account.

   (1) Narrow-band analog private network circuits and facilities furnished
   exclusively for record forms of communications, such as teletypewriter,
   teletypesetter, telewriter, ticker, Morse, signaling, remote metering, and
   supervisory services.

   (2)  Private  network  circuits and facilities (including multipurpose
   wide-band) which provide voice grade services for the transmission of analog
   signals. It includes revenue from services such as voice, data and telephoto
   communication,  as  well  as  remote  metering,  supervisory  control,
   miscellaneous signaling and channels furnished for the purpose of extending
   customer—provided communications systems. It includes revenue from the
   provision of facilities between customer premises and a serving office, a
   carrier distribution point, or an extension distribution channel.

   (3) Private network circuits and facilities furnished for audio program
   transmission purposes, such as radio broadcasting, sound recording (wired
   music) and loud speaker services. It includes revenue from the provision of
   facilities for the transmission of analog signals between customer premises
   and  a  serving  office, a carrier distribution point, or an extension
   distribution channel furnished in connection with such services. It also
   includes revenue from facilities furnished to carry the audio portion of a
   television program if furnished under separate audio rates. If the rate for
   television program services includes both the picture and sound portion of
   the transmission, the revenue shall also be included in this account.

   (4) Private network circuits and facilities furnished for television program
   transmission purposes, such as commercial broadcast and educational or
   private television services. It includes revenue from the provision of
   facilities for the transmission of analog signals between customer premises
   and  a  serving  office, a carrier distribution point, or an extension
   distribution channel furnished in connection with such services. It also
   includes revenue from both the picture and sound portions of transmission
   for television program service when provided under a combined rate schedule.

   (5) The provision of circuits and facilities for the transmission of digital
   signals only.

   (6) The provision of common user channels and switching capabilities used
   for the transmission of telecommunication signals between three (3) or more
   points in the network. Also included is revenue derived from the provision
   of basic switching and transfer arrangements used to connect private line
   channels.

   (7) Charges and credits resulting from contractual revenue pooling and/or
   sharing agreements for tariffed long distance public network services and
   for tariffed long distance private network services.

   [ 67 FR 5692 , Feb. 6, 2002]

§ 32.5200   Miscellaneous revenue.

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   This account shall include revenue derived from the following sources. For
   Class B companies, this account shall also include revenue of the type and
   character required of Class A companies in Account 5230, Directory revenue.

   (a) Rental or subrental to others of telecommunications plant furnished
   apart from telecommunications services rendered by the company (this revenue
   includes taxes when borne by the lessee). It includes revenue from the rent
   of such items as space in conduit, pole line space for attachments, and any
   allowance  for  return on property used in joint operations and shared
   facilities agreements. The expense of maintaining and operating the rented
   property, including depreciation and insurance, shall be included in the
   appropriate operating expense accounts. Taxes applicable to the rented
   property  shall  be  included  by  the owner of the rented property in
   appropriate tax accounts. When land or buildings are rented on an incidental
   basis for non-telecommunications use, the rental and expenses are included
   in Account 7300, Nonoperating income and expense.

   (b) Services rendered to other companies under a license agreement, general
   services contract, or other arrangement providing for the furnishing of
   general accounting, financial, legal, patent, and other general services
   associated with the provision of regulated telecommunications services. (See
   also Account 5230.)

   (c) The provision, either under tariff or through contractual arrangements,
   of special billing information to customers in the form of magnetic tapes,
   cards or statements. Special billing information provides detail in a format
   and/or at a level of detail not normally provided in the standard billing
   rendered for the regulated telephone services utilized by the customer.

   (d) The performance of customer operations services for others incident to
   the company's regulated telecommunications operations which are not provided
   for elsewhere. (See also §§32.14(e) and 32.4999(e)).

   (e) Contract services (plant maintenance) performed for others incident to
   the company's regulated telecommunications operations. This includes revenue
   from the incidental performance of nontariffed operating and maintenance
   activities for others which are similar in nature to those activities which
   are  performed  by  the  company  in operating and maintaining its own
   telecommunications plant facilities. The records supporting the entries in
   this account shall be maintained with sufficient particularity to identify
   the revenue and associated Plant Specific Operations Expenses related to
   each undertaking. This account does not include revenue related to the
   performance of operation or maintenance activities under a joint operating
   agreement.

   (f)  The  provision  of  billing  and  collection  services  to  other
   telecommunications companies. This includes amounts charged for services
   such  as message recording, billing, collection, billing analysis, and
   billing information services, whether rendered under tariff or contractual
   arrangements.

   (g) Charges and credits resulting from contractual revenue pooling and/or
   sharing agreements for activities included in the miscellaneous revenue
   accounts  only when they are not identifiable by miscellaneous revenue
   account in the settlement process. (See also §32.4999(e)). The extent that
   the  charges  and  credits  resulting from a settlement process can be
   identified by miscellaneous revenue accounts they shall be recorded in the
   applicable account.

   (h) The provision of transport and termination of local telecommunications
   traffic pursuant to section 251(c) of the Communications Act and part 51 of
   this chapter.

   (i) The provision of unbundled network elements pursuant to section 251(c)
   of the Communications Act and part 51 of this chapter.

   (j) This account shall also include other incidental regulated revenue such
   as:

   (1) Collection overages (collection shortages shall be charged to Account
   6623, Customer services);

   (2) Unclaimed refunds for telecommunications services when not subject to
   escheats;

   (3) Charges (penalties) imposed by the company for customer checks returned
   for non-payment;

   (4) Discounts allowed customers for prompt payment;

   (5) Late-payment charges;

   (6) Revenue from private mobile telephone services which do not have access
   to the public switched network; and

   (7) Other incidental revenue not provided for elsewhere in other Revenue
   accounts.

   (k) Any definitely known amounts of losses of revenue collections due to
   fire or theft, at customers' coin-box stations, at public or semipublic
   telephone stations, in the possession of collectors en route to collection
   offices, on hand at collection offices, and between collection offices and
   banks shall be charged to Account 6720, General and Administrative.

   [ 69 FR 53650 , Sept. 2, 2004]

§ 32.5230   Directory revenue.

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   This account shall include revenue derived from alphabetical and classified
   sections of directories and shall also include fees paid by other entities
   for the right to publish the company's directories. Items to be included
   are:

   (a) All revenue derived from the classified section of the directories;

   (b) Revenue from the sale of new telephone directories whether they are the
   company's own directories or directories purchased from others. This shall
   also include revenue from the sale of specially bound telephone directories
   and special telephone directory covers;

   (c) Amounts charged for additional and boldface listings, marginal displays,
   inserts,  and  other advertisements in the alphabetical section of the
   company's telephone directories; and

   (d) Charges for unlisted and non-published telephone numbers.

   [ 69 FR 44607 , July 27, 2004]

§ 32.5280   Nonregulated operating revenue.

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   (a) This account shall include revenues derived from a nonregulated activity
   involving the common or joint use of assets or resources in the provision of
   regulated and nonregulated products or services.

   (b) This account shall be debited and regulated revenue accounts shall be
   credited  at  tariffed  rates  when  tariffed services are provided to
   nonregulated activities that are accounted for as prescribed in §32.23(c) of
   this subpart.

   (c) Separate subsidiary record categories shall be maintained for two groups
   of nonregulated revenue as follows: one subsidiary record for all revenues
   derived  from  regulated  services treated as nonregulated for federal
   accounting purposes pursuant to Commission order and the second for all
   other  revenues  derived  from a nonregulated activity as set forth in
   paragraph (a) of this section.

   [ 53 FR 49322 , Dec. 7, 1988, as amended at  64 FR 50008 , Sept. 15, 1999;  67 FR 5694 , Feb. 6, 2002]

§ 32.5300   Uncollectible revenue.

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   This account shall be charged with amounts concurrently credited to Account
   1170, Receivables.

   [ 67 FR 5694 , Feb. 6, 2002]

Subpart E—Instructions for Expense Accounts

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§ 32.5999   General.

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   (a) Structure of the expense accounts. (1) The expense section of the system
   of  accounts  shall be organized by expense group summary account, and
   subsidiary record category (if required).

   (2) The expense section of this system of accounts shall be comprised of
   four major expense groups—Plant Specific Operations, Plant Nonspecific
   Operations, Customer Operations and Corporate Operations. Expenses to be
   recorded in Plant Specific and Plant Nonspecific Operations Expense Groups
   generally  reflect cost associated with the various kinds of equipment
   identified in the plant asset accounts. Expenses to be recorded in the
   Customer Operations and Corporate Operations accounts reflect the costs of,
   or are associated with, functions performed by people, irrespective of the
   organization in which any particular function is performed.

   (3) Accounts shall be maintained as prescribed in this section subject to
   the  conditions  described  in  §32.13 in subpart B. Subsidiary record
   categories  may  be required below the account level by this system of
   accounts or by Commission order.

   (b) Plant Specific Operations Expense. (1) The Plant Specific Operations
   Expense Accounts, 6110 through 6441, are used to record costs related to
   specific kinds of telecommunications plant.

   (2) The Plant Specific Operations Expense accounts predominantly mirror the
   telecommunications  plant  in service detail accounts and are numbered
   consistently with them; the first digit of the expense account being six (6)
   and the remaining digits being the same as the last three numbers of the
   related plant account. In classifying Plant Specific Operations expenses,
   the text of the corresponding plant account should be consulted to ensure
   appropriateness.

   (3) The Plant Specific Operations Expense accounts shall include the costs
   of  inspecting,  testing (except as specified in Account 6533, Testing
   Expense) and reporting on the condition of telecommunications plant to
   determine the need for repairs, replacements, rearrangements and changes;
   performing routine work to prevent trouble (except as specified in Account
   6533), replacing items of plant other than retirement units; rearranging and
   changing the location of plant not retired; repairing material for reuse;
   restoring the condition of plant damaged by storms, floods, fire or other
   casualties (other than the cost of replacing retirement units); inspecting
   after repairs have been made; and receiving training to perform these kinds
   of work. Also included are the costs of direct supervision (immediate of
   first-level) and office support of this work.

   (4) In addition to the activities specified in paragraph (b)(3) of this
   section, the appropriate Plant Specific Operations Expense accounts shall
   include the cost of personnel whose principal job is the operation of plant
   equipment, such as general purpose computer operators, aircraft pilots,
   chauffeurs and shuttle bus drivers. However, when the operation of equipment
   is performed as part of other identifiable functions (such as the use of
   office equipment, capital tools or motor vehicles), the operators' cost
   shall be charged to accounts appropriate for those functions. (For costs of
   operator services personnel, see Accounts 6621, Call completion services,
   and 6622, Number services, and for costs of test board personnel see Account
   6533.)

   (c) Plant nonspecific operations expense. The Plant Nonspecific Operations
   Expense accounts shall include expenses related to property held for future
   telecommunications use, provisioning expenses, network operations expenses,
   and depreciation and amortization expenses. Accounts in this group (except
   for Account 6540, Access expense, and Accounts 6560 through 6565) shall
   include the costs of performing activities described in narratives for
   individual accounts. These costs shall also include the costs of supervision
   and office support of these activities.

   (d) Customer Operations Expense. The Customer Operations Expense accounts
   shall include the cost of performing customer related marketing and services
   activities described in narratives for individual accounts. These costs
   shall also include the costs of supervision, office support and training for
   these activities.

   (e) Corporate Operations Expense. The Corporate Operations Expense accounts
   shall include the costs of performing executive and planning activities and
   general and administrative activities described in narratives for individual
   accounts. These costs shall also include the costs of supervision, office
   support and training for these activities.

   (f) Reimbursements. Reimbursements of actual costs incurred in connection
   with joint operations or projects repairing plant due to damages by others,
   and obligations to make changes in telecommunications plant (such as highway
   relocations), shall be credited to the accounts originally charged.

   (g) Expense accounts to be maintained.
   Account title Class A
   account Class B
   account
   Income Statement Accounts
   Plant specific operations expense:
   Network support expense 6110
   Motor vehicle expense 6112
   Aircraft expense 6113
   Tools and other work equipment expense 6114
   General support expenses 6120
   Land and building expenses 6121
   Furniture and artworks expense 6122
   Office equipment expense 6123
   General purpose computers expense 6124
   Central office switching expense 6210
   Non-digital switching expense 6211
   Digital electronic switching expense 6212
   Operators system expense 6220 6220
   Central office transmission expenses 6230
   Radio systems expense 6231
   Circuit equipment expense 6232
   Information origination/termination expense 6310
   Station apparatus expense 6311
   Large private branch exchange expense 6341
   Public telephone terminal equipment expense 6351
   Other terminal equipment expense 6362
   Cable and wire facilities expenses 6410
   Poles expense 6411
   Aerial cable expense 6421
   Underground cable expense 6422
   Buried cable expense 6423
   Submarine and deep sea cable expense 6424
   Intrabuilding network cable expense 6426
   Aerial wire expense 6431
   Conduit systems expense 6441
   Plant nonspecific operations expense:
   Other property plant and equipment expenses 6510
   Property held for future telecommunications use expense 6511
   Provisioning expense 6512
   Network operations expenses 6530
   Power expense 6531
   Network administration expense 6532
   Testing expense 6533
   Plant operations administration expense 6534
   Engineering expense 6535
   Access expense 6540 6540
   Depreciation and amortization expenses 6560
   Depreciation expense—telecommunications plant in service 6561
   Depreciation expense—property held for future telecommunications use 6562
   Amortization expense—tangible 6563
   Amortization expense—intangible 6564
   Amortization expense—other 6565
   Customer operations expense:
   Marketing 6610
   Product management and sales 6611
   Product advertising 6613
   Services 6620
   Call completion services 6621
   Number services 6622
   Customer services 6623
   Corporate operations expense:
   General and administrative 6720 6720
   Provision for uncollectible notes receivable 6790 6790

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  52 FR 7580 , Mar. 12, 1987;  64 FR 50008 , Sept. 15, 1999;  65 FR 16335 , Mar. 28, 2000;  67 FR 5694 , Feb. 6, 2002;
    69 FR 53651 , Sept. 2, 2004]

§ 32.6110   Network support expenses.

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   (a) Class B telephone companies shall use this account for expenses of the
   type and character required of Class A companies in Accounts 6112 through
   6114.

   (b) Credits shall be made to this account by Class B companies for amounts
   transferred to Construction and/or other Plant Specific Operations Expense
   accounts. These amounts shall be computed on the basis of direct labor
   hours.

   [ 67 FR 5695 , Feb. 6, 2002]

§ 32.6112   Motor vehicle expense.

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   (a) This account shall include costs of fuel, lubrications, license and
   inspection fees, washing, repainting, and minor accessories. Also included
   are the costs of personnel whose principal job is operating motor vehicles,
   such as chauffeurs and shuttle bus drivers. The costs of users of motor
   vehicles whose principal job is not the operation of motor vehicles shall be
   charged to accounts appropriate for the activities performed.

   (b)  Credits  shall be made to this account for amounts transferred to
   Construction and/or to other Plant Specific Operations Expense accounts.
   These amounts shall be computed on the basis of direct labor hours.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5695 , Feb. 6, 2002]

§ 32.6113   Aircraft expense.

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   (a) This account shall include such costs as aircraft fuel, flight crews,
   mechanics  and  ground  crews,  licenses and inspection fees, washing,
   repainting, and minor accessories.

   (b)  Credits  shall be made to this account for amounts transferred to
   Construction and/or to other Plant Specific Operations Expense accounts.
   These amounts shall be computed on the basis of direct labor hours.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5695 , Feb. 6, 2002]

§ 32.6114   Tools and other work equipment expense.

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   (a) This account shall include costs incurred in connection with special
   purpose vehicles, garage work equipment and other work equipment included in
   Account 2114, Tools and other work equipment. This account shall be charged
   with costs incurred in connection with the work equipment itself. This
   account shall also include such costs as fuel, licenses and inspection fees,
   washing, repainting and minor accessories. The costs of using garage work
   equipment to maintain motor vehicles shall be charged to Account 6112, Motor
   vehicles  expense. This account shall not be charged with the costs of
   operators of special purpose vehicles and other work equipment. The costs of
   operators of this equipment shall be charged to accounts appropriate for the
   activities performed.

   (b) Credits shall be made to this account for amounts related to special
   purpose vehicles and other work equipment transferred to Construction and/or
   to other Plant Specific Operations Expense accounts. These amounts shall be
   computed on the basis of direct labor hours.

   [ 64 FR 50008 , Sept. 15, 1999, as amended at  67 FR 5695 , Feb. 6, 2002]

§ 32.6120   General support expenses.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A companies in Accounts 6121 through 6124.

   [ 67 FR 5695 , Feb. 6, 2002]

§ 32.6121   Land and building expense.

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   (a) This account shall include expenses associated with land and buildings
   (excluding amortization of leasehold improvements). This account shall also
   include janitorial service, cleaning supplies, water, sewage, fuel and guard
   service, and electrical power.

   (b) The cost of electrical power used to operate the telecommunications
   network shall be charged to Account 6531, Power Expense, and the cost of
   separately  metered  electricity  used for operating specific types of
   equipment,  such as computers, shall be charged to the expense account
   appropriate for such use.

§ 32.6122   Furniture and artworks expense.

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   This account shall include expenses associated with furniture and artworks.

§ 32.6123   Office equipment expense.

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   This account shall be charged only with costs incurred in connection with
   the office equipment itself. The costs of operators of this equipment shall
   be charged to accounts appropriate for the activities performed.

§ 32.6124   General purpose computers expense.

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   This account shall include the costs of personnel whose principal job is the
   physical operation of general purpose computers and the maintenance of
   operating systems. This excludes the cost of preparation of input data or
   the use of outputs which are chargeable to the accounts appropriate for the
   activities being performed. Also excluded are costs incurred in planning and
   maintaining application systems and databases for general purpose computers.
   (See  also  §32.6720,  General and administrative.) Separately metered
   electricity for general purpose computers shall also be included in this
   account.

   [ 67 FR 5695 , Feb. 6, 2002]

§ 32.6210   Central office switching expenses.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A companies in Accounts 6211 through 6212.

   [ 67 FR 5695 , Feb. 6, 2002]

§ 32.6211   Non-digital switching expense.

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   This account shall include expenses associated with non-digital electronic
   switching and electro-mechanical switching.

   [ 67 FR 5695 , Feb. 6, 2002]

§ 32.6212   Digital electronic switching expense.

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   (a) This account shall include expenses associated with digital electronic
   switching. Digital electronic switching expenses shall be maintained in the
   following subaccounts: 6212.1 Circuit, 6212.2 Packet.

   (b) This subaccount 6212.1 Circuit shall include expenses associated with
   digital electronic switching equipment used to provide circuit switching.

   (c) This subaccount 6212.2 Packet shall include expenses associated with
   digital electronic switching equipment used to provide packet switching.

   [ 67 FR 5695 , Feb. 6, 2002]

§ 32.6220   Operator systems expense.

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   This  account  shall include expenses associated with operator systems
   equipment.

§ 32.6230   Central office transmission expense.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A companies in Accounts 6231 and 6232.

   [ 67 FR 5695 , Feb. 6, 2002]

§ 32.6231   Radio systems expense.

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   This account shall include expenses associated with radio systems.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5695 , Feb. 6, 2002]

§ 32.6232   Circuit equipment expense.

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   (a) This account shall include expenses associated with circuit equipment.
   Circuit equipment expenses shall be maintained in the following subaccounts:
   6232.1 Electronic, 6232.2 Optical.

   (b) This subaccount 6232.1 Electronic shall include expenses associated with
   electronic circuit equipment.

   (c) This subaccount 6232.2 Optical shall include expenses associated with
   optical circuit equipment.

   [ 67 FR 5695 , Feb. 6, 2002]

§ 32.6310   Information origination/termination expenses.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A telephone companies in Accounts 6311
   through 6362.

   [ 67 FR 5696 , Feb. 6, 2002]

§ 32.6311   Station apparatus expense.

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   This account shall include expenses associated with station apparatus.
   Expenses associated with company internal use communication equipment shall
   be recorded in Account 6123, Office Equipment Expense.

§ 32.6341   Large private branch exchange expense.

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   This account shall include expenses associated with large private branch
   exchanges. Expenses associated with company internal use communication
   equipment shall be recorded in Account 6123, Office Equipment Expense.

§ 32.6351   Public telephone terminal equipment expense.

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   This  account  shall include expenses associated with public telephone
   terminal equipment.

§ 32.6362   Other terminal equipment expense.

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   This  account  shall  include  expenses associated with other terminal
   equipment.

§ 32.6410   Cable and wire facilities expenses.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A companies in Accounts 6411 through 6441.

   [ 67 FR 5696 , Feb. 6, 2002]

§ 32.6411   Poles expense.

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   This account shall include expenses associated with poles.

§ 32.6421   Aerial cable expense.

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   (a) This account shall include expenses associated with aerial cable.

   (b)  Subsidiary  record  categories shall be maintained as provided in
   §32.2421(a) of subpart C.

§ 32.6422   Underground cable expense.

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   (a) This account shall include expenses associated with underground cable.

   (b)  Subsidiary  record  categories shall be maintained as provided in
   §32.2422(a) of subpart C.

§ 32.6423   Buried cable expense.

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   (a) This account shall include expenses associated with buried cable.

   (b)  Subsidiary  record  categories shall be maintained as provided in
   §32.2423(a) of subpart C.

§ 32.6424   Submarine and deep sea cable expense.

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   (a) This account shall include expenses associated with submarine and deep
   sea cable.

   (b)  Subsidiary  record  categories shall be maintained as provided in
   §32.2424.

   [ 67 FR 5696 , Feb. 6, 2002]

§ 32.6426   Intrabuilding network cable expense.

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   (a)  This account shall include expenses associated with intrabuilding
   network cable.

   (b)  Subsidiary  record  categories shall be maintained as provided in
   §32.2426(a) of subpart C.

§ 32.6431   Aerial wire expense.

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   This account shall include expenses associated with aerial wire.

§ 32.6441   Conduit systems expense.

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   This account shall include expenses associated with conduit systems.

§ 32.6510   Other property, plant and equipment expenses.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A companies in Accounts 6511 and 6512.

   [ 67 FR 5696 , Feb. 6, 2002]

§ 32.6511   Property held for future telecommunications use expense.

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   This account shall include expenses associated with property held for future
   telecommunications use.

§ 32.6512   Provisioning expense.

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   (a) This account shall include costs incurred in provisioning material and
   supplies, including office supplies. This includes receiving and stocking,
   filling requisitions from stock, monitoring and replenishing stock levels,
   delivery of material, storage, loading or unloading and administering the
   reuse or refurbishment of material. Also included are adjustments resulting
   from the periodic inventory of material and supplies.

   (b)  Credits  shall be made to this account for amounts transferred to
   construction and/or to Plant Specific Operations Expense. These costs are to
   be cleared by adding to the cost of material and supplies a suitable loading
   charge.

   [ 67 FR 5696 , Feb. 6, 2002]

§ 32.6530   Network operations expense.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A companies in Accounts 6531 through 6535.

   [ 67 FR 5696 , Feb. 6, 2002]

§ 32.6531   Power expense.

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   This account shall include the cost of electrical power used to operate the
   telecommunications network.

§ 32.6532   Network administration expense.

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   This account shall include costs incurred in network administration. This
   includes such activities as controlling traffic flow, administering traffic
   measuring and monitoring devices, assigning equipment and load balancing,
   collecting  and  summarizing traffic data, administering trunking, and
   assigning interoffice facilities and circuit layout work.

§ 32.6533   Testing expense.

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   This account shall include costs incurred in testing telecommunications
   facilities from a testing facility (test desk or other testing system) to
   determine the condition of plant on either a routine basis or prior to
   assignment of the facilities; receiving, recording and analyzing trouble
   reports; testing to determine the nature and location of reported trouble
   condition; and dispatching repair persons or otherwise initiating corrective
   action. (Note also §32.5999(b)(3) of this subpart.)

§ 32.6534   Plant operations administration expense.

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   (a) This account shall include costs incurred in the general administration
   of plant operations. This includes supervising plant operations (except as
   specified in §32.5999(a)(3) of this subpart; planning, coordinating and
   monitoring plant operations; and performing staff work such as developing
   methods and procedures, preparing and conducting training (except on-the-job
   training) and coordinating safety programs.

   (b)  Credits  shall be made to this account for amounts transferred to
   construction accounts. These amounts shall be computed on the basis of
   direct labor hours. (See §32.2000(c)(2)(ii) of subpart C.)

§ 32.6535   Engineering expense.

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   (a) This account shall include costs incurred in the general engineering of
   the  telecommunications  plant which are not directly chargeable to an
   undertaking or project. This includes developing input to the fundamental
   planning  process,  performing preliminary work or advance planning in
   connection with potential undertakings, and performing special studies of an
   engineering nature.

   (b)  Credits  shall be made to this account for amounts transferred to
   construction accounts. These amounts shall be computed on the basis of
   direct labor hours. (See §32.2000(c)(2)(ii) of subpart C.)

§ 32.6540   Access expense.

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   (a) This account shall include amounts paid by interexchange carriers or
   other exchange carriers to another exchange carrier for the provision of
   carrier's carrier access.

   (b) Subsidiary record categories shall be maintained in order that the
   entity may separately report interstate and intrastate carrier's carrier
   expense. Such subsidiary record categories shall be reported as required by
   Part 43 of this Commission's Rules and Regulations.

   [ 52 FR 43917 , Nov. 17, 1987]

§ 32.6560   Depreciation and amortization expenses.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A companies in Accounts 6561 through 6565.

   [ 69 FR 53652 , Sept. 2, 2004]

§ 32.6561   Depreciation expense—telecommunications plant in service.

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   This account shall include the depreciation expense of capitalized costs in
   Accounts 2112 through 2441, inclusive.

   [ 69 FR 44607 , July 27, 2004]

§ 32.6562   Depreciation expense—property held for future telecommunications
use.

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   This account shall include the depreciation expense of capitalized costs
   included in Account 2002, Property held for future telecommunications use.

   [ 69 FR 53652 , Sept. 2, 2004]

§ 32.6563   Amortization expense—tangible.

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   This  account shall include only the amortization of costs included in
   Accounts 2681, Capital leases, and 2682, Leasehold improvements.

   [ 69 FR 44607 , July 27, 2004]

§ 32.6564   Amortization expense—intangible.

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   This account shall include the amortization of costs included in Account
   2690, Intangibles.

   [ 69 FR 44607 , July 27, 2004]

§ 32.6565   Amortization expense—other.

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   (a) This account shall include only the amortization of costs included in
   Account 2005, Telecommunications plant adjustment.

   (b) This account shall also include lump-sum write offs of amounts of plant
   acquisition adjustment as provided for in §32.2005(b)(3) of subpart C.

   (c) Subsidiary records shall be maintained so as to show the character of
   the amounts contained in this account.

   [ 69 FR 44607 , July 27, 2004]

§ 32.6610   Marketing.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A companies in Accounts 6611 through 6613.

   [ 67 FR 5696 , Feb. 6, 2002]

§ 32.6611   Product management and sales.

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   This account shall include:

   (a)  Costs incurred in performing administrative activities related to
   marketing products and services. This includes competitive analysis, product
   and service identification and specification, test market planning, demand
   forecasting,  product  life  cycle  analysis,  pricing  analysis,  and
   identification and establishment of distribution channels.

   (b)  Costs  incurred  in  selling products and services. This includes
   determination of individual customer needs, development and presentation of
   customer proposals, sales order preparation and handling, and preparation of
   sales records.

   [ 67 FR 5696 , Feb. 6, 2002]

§ 32.6613   Product advertising.

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   This account shall include costs incurred in developing and implementing
   promotional strategies to stimulate the purchase of products and services.
   This excludes nonproduct-related advertising, such as corporate image, stock
   and bond issue and employment advertisements, which shall be included in the
   appropriate functional accounts.

§ 32.6620   Services.

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   Class B telephone companies shall use this account for expenses of the type
   and character required of Class A companies in Accounts 6621 through 6623.

   [ 69 FR 53652 , Sept. 2, 2004]

§ 32.6621   Call completion services.

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   This account shall include costs incurred in helping customers place and
   complete calls, except directory assistance. This includes handling and
   recording;  intercept;  quoting rates, time and charges; and all other
   activities involved in the manual handling of calls.

   [ 69 FR 44607 , July 27, 2004]

§ 32.6622   Number services.

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   This account shall include costs incurred in providing customer number and
   classified listings. This includes preparing or purchasing, compiling, and
   disseminating those listings through directory assistance or other means.

§ 32.6623   Customer services.

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   (a) This account shall include costs incurred in establishing and servicing
   customer accounts. This includes:

   (1) Initiating customer service orders and records;

   (2) Maintaining and billing customer accounts;

   (3) Collecting and investigating customer accounts, including collecting
   revenues,  reporting receipts, administering collection treatment, and
   handling contacts with customers regarding adjustments of bills;

   (4) Collecting and reporting pay station receipts; and

   (5) Instructing customers in the use of products and services.

   (b) This account shall also include amounts paid by interexchange carriers
   or other exchange carriers to another exchange carrier for billing and
   collection services. Subsidiary record categories shall be maintained in
   order  that the entity may separately report interstate and intrastate
   amounts. Such subsidiary record categories shall be reported as required by
   part 43 of this Commission's rules and regulations.

   [ 69 FR 44608 , July 27, 2004]

§ 32.6720   General and administrative.

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   This account shall include costs incurred in the provision of general and
   administrative services as follows:

   (a) Formulating corporate policy and in providing overall administration and
   management. Included are the pay, fees and expenses of boards of directors
   or similar policy boards and all board-designated officers of the company
   and their office staffs, e.g., secretaries and staff assistants.

   (b) Developing and evaluating long-term courses of action for the future
   operations of the company. This includes performing corporate organization
   and integrated long-range planning, including management studies, options
   and contingency plans, and economic strategic analysis.

   (c) Providing accounting and financial services. Accounting services include
   payroll and disbursements, property accounting, capital recovery, regulatory
   accounting (revenue requirements, separations, settlements and corollary
   cost  accounting),  non-customer billing, tax accounting, internal and
   external auditing, capital and operating budget analysis and control, and
   general accounting (accounting principles and procedures and journals,
   ledgers,  and  financial  reports). Financial services include banking
   operations, cash management, benefit investment fund management (including
   actuarial services), securities management, debt trust administration,
   corporate financial planning and analysis, and internal cashier services.

   (d) Maintaining relations with government, regulators, other companies and
   the general public. This includes:

   (1)  Reviewing existing or pending legislation (see also Account 7300,
   Nonoperating income and expense, for lobbying expenses);

   (2) Preparing and presenting information for regulatory purposes, including
   tariff  and  service  cost  filings,  and obtaining radio licenses and
   construction permits;

   (3) Performing public relations and non-product-related corporate image
   advertising activities;

   (4)  Administering  relations,  including  negotiating contracts, with
   telecommunications  companies  and  other  utilities,  businesses, and
   industries. This excludes sales contracts (see also Account 6611, Product
   management and sales); and

   (5) Administering investor relations.

   (e) Performing personnel administration activities. This includes:

   (1) Equal Employment Opportunity and Affirmative Action Programs;

   (2) Employee data for forecasting, planning and reporting;

   (3) General employment services;

   (4) Occupational medical services;

   (5) Job analysis and salary programs;

   (6) Labor relations activities;

   (7) Personnel development and staffing services, including counseling,
   career planning, promotion and transfer programs;

   (8) Personnel policy development;

   (9) Employee communications;

   (10) Benefit administration;

   (11) Employee activity programs;

   (12) Employee safety programs; and

   (13) Nontechnical training course development and presentation.

   (f) Planning and maintaining application systems and databases for general
   purpose computers.

   (g) Providing legal services: This includes conducting and coordinating
   litigation, providing guidance on regulatory and labor matters, preparing,
   reviewing and filing patents and contracts and interpreting legislation.
   Also  included  are court costs, filing fees, and the costs of outside
   counsel, depositions, transcripts and witnesses.

   (h)  Procuring  material and supplies, including office supplies. This
   includes analyzing and evaluating suppliers' products, selecting appropriate
   suppliers, negotiating supply contracts, placing purchase orders, expediting
   and  controlling  orders placed for material, developing standards for
   material purchased and administering vendor or user claims.

   (i) Making planned search or critical investigation aimed at discovery of
   new knowledge. It also includes translating research findings into a plan or
   design for a new product or process or for a significant improvement to an
   existing product or process, whether intended for sale or use. This excludes
   making  routine alterations to existing products, processes, and other
   ongoing operations even though those alterations may represent improvements.

   (j) Performing general administrative activities not directly charged to the
   user, and not provided in paragraphs (a) through (i) of this section. This
   includes  providing  general reference libraries, food services (e.g.,
   cafeterias, lunch rooms and vending facilities), archives, general security
   investigation services, operating official private branch exchanges in the
   conduct of the business, and telecommunications and mail services. Also
   included are payments in settlement of accident and damage claims, insurance
   premiums for protection against losses and damages, direct benefit payments
   to or on behalf of retired and separated employees, accident and sickness
   disability  payments,  supplemental  payments  to  employees  while in
   governmental service, death payments, and other miscellaneous costs of a
   corporate nature. This account excludes the cost of office services, which
   are to be included in the accounts appropriate for the activities supported.

   [ 67 FR 5696 , Feb. 6, 2002]

§ 32.6790   Provision for uncollectible notes receivable.

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   This account shall be charged with amounts concurrently credited to Account
   1170, Receivables.

   [ 67 FR 5697 , Feb. 6, 2002]

Subpart F—Instructions For Other Income Accounts

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§ 32.6999   General.

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   (a) Structure of the other income accounts. The Other Income Accounts are
   designed to reflect both operating and nonoperating income items including
   taxes, extraordinary items and other income and expense items not properly
   included elsewhere.

   (b) Other income accounts listing. 
   Account title Class A
   account Class B
   account
   Other operating income and expense:
   Other operating income and expense 7100 7100
   Operating taxes:
   Operating taxes    7200
   Operating investment tax credits-net 7210
   Operating Federal income taxes 7220
   Operating state and local income taxes 7230
   Operating other taxes 7240
   Provision for deferred operating income taxes—net 7250
   Nonoperating income and expense:
   Nonoperating income and expense 7300 7300
   Nonoperating taxes:
   Nonoperating taxes 7400 7400
   Interest and related items:
   Interest and related items 7500 7500
   Extraordinary items 7600 7600
   Jurisdictional differences and non-regulated income items:
   Income effect of jurisdictional ratemaking difference—net 7910 7910
   Nonregulated net income 7990 7990

   [ 67 FR 5697 , Feb. 6, 2002]

§ 32.7100   Other operating income and expenses.

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   This account shall be used to record the results of transactions, events or
   circumstances during the periods which are incidental or peripheral to the
   major or central operations of the company. It shall be used to record all
   items of an operating nature such as incidental work performed for others
   not provided for elsewhere. Whenever practicable the inflows and outflows
   associated with a transaction, event or circumstances shall be matched and
   the result shown as a net gain or loss. This account shall include the
   following:

   (a) Profits realized from custom work (plant construction) performed for
   others incident to the company's regulated telecommunications operations.
   This  includes  profits from the incidental performance of nontariffed
   construction activities (including associated engineering and design) for
   others which are similar in nature to those activities which are performed
   by the company in constructing its own telecommunications plant facilities.
   The records supporting the entries in this account for income and custom
   work  shall  be  maintained  with sufficient particularity to identify
   separately the revenue and costs associated with each undertaking.

   (b)  Return  on investment for the use of regulated property plant and
   equipment to provide nonregulated products and services.

   (c) All gains and losses resulting from the exchange of foreign currency.
   Transaction  (realized) gains or losses shall be measured based on the
   exchange rate in effect on the transaction date. Unrealized gains or losses
   shall be measured based on the exchange rate in effect at the balance sheet
   date.

   (d) Gains or losses resulting from the disposition of land or artworks.

   (e)  Charges  or  credits,  as  appropriate,  to record the results of
   transactions, events or circumstances which are of an operational nature,
   but occur irregularly or are peripheral to the major or central operations
   of the company and not provided for elsewhere.

   [ 67 FR 5698 , Feb. 6, 2002]

§ 32.7199   Content of accounts.

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   The Operating Tax accounts shall include the taxes arising from the central
   operations of the company.

§ 32.7200   Operating taxes.

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   Class B telephone companies shall use this account for operating taxes of
   the  type and character required of Class A companies in Accounts 7210
   through 7250.

   [ 67 FR 5698 , Feb. 6, 2002]

§ 32.7210   Operating investment tax credits—net.

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   (a) This account shall be charged and Account 4320, Unamortized Operating
   Investment Tax Credits—Net, shall be credited with investment tax credits
   generated from qualified expenditures related to regulated operations which
   the company defers rather than recognizes currently in income.

   (b) This account shall be credited and Account 4320 shall be charged ratably
   with the amortization of each year's investment tax credits included in
   Account  4320  for  investment  services for ratemaking purposes. Such
   amortization shall be determined in relation to the period of time used for
   computing book depreciation on the property with respect to which the tax
   credits relate.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5698 , Feb. 6, 2002]

§ 32.7220   Operating Federal income taxes.

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   (a) This account shall be charged and Account 4070, Income Taxes-Accrued,
   shall be credited for the amount of Federal Income Taxes for the current
   period. This account shall also reflect subsequent adjustments to amounts
   previously charged.

   (b) Taxes should be accrued each month on an estimated basis and adjustments
   made as later data becomes available.

   (c) Tax credits, other than investment tax credits, if normalized, shall be
   recorded consistent with the accounting for investment tax credits and shall
   be amortized to income as directed by this Commission.

   (d) No entries shall be made to this account to reflect interperiod tax
   allocations.

§ 32.7230   Operating state and local income taxes.

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   (a) This account shall be charged and Account 4070, Income Taxes—Accrued,
   shall be credited for the amount of state and local income taxes for the
   current period. This account shall also reflect subsequent adjustments to
   amounts previously charged.

   (b) Taxes should be accrued each month on an estimated basis and adjustments
   made as later data becomes available.

   (c) No entries shall be made to this account to reflect interperiod tax
   allocations.

§ 32.7240   Operating other taxes.

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   (a) This account shall be charged and Account 4080, Other Taxes—Accrued,
   shall be credited for all taxes, other than Federal, state and local income
   taxes and payroll related taxes, related to regulated operations applicable
   to current periods. Among the items includable in this account are property,
   gross receipts, franchise and capital stock taxes; this account shall also
   reflect subsequent adjustments to amounts previously charged.

   (b)  Special assessments for street and other improvements and special
   benefit taxes, such as water taxes and the like, shall be included in the
   operating expense accounts or investment accounts, as may be appropriate.

   (c) Discounts allowed for prompt payment of taxes shall be credited to the
   account to which the taxes are chargeable.

   (d)  Interest  on tax assessments which are not paid when due shall be
   included in Account 7500, Interest and related items.

   (e) Taxes paid by the company under tax-free covenants on indebtedness shall
   be charged to Account 7300, Nonoperating income and expense.

   (f) Sales and use taxes shall be accounted for, so far as practicable, as
   part of the cost of the items to which the taxes relate.

   (g) Taxes on rented telecommunications plant which are borne by the lessee
   shall be credited by the owner to Account 5200, Miscellaneous revenue, and
   shall be charged by the lessee to the appropriate Plant Specific Operations
   Expense account.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  67 FR 5698 , Feb. 6, 2002]

§ 32.7250   Provision for deferred operating income taxes—net.

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   (a) This account shall be charged or credited, as appropriate, with contra
   entries recorded to the following accounts for income tax expense that has
   been deferred in accordance with §32.22 of Subpart B.

   4100  Net Current Deferred Operating Income Taxes

   4340  Net Noncurrent Deferred Operating Income Taxes

   (b) Subsidiary record categories shall be maintained to distinguish between
   property and nonproperty related deferrals and so that the company may
   separately report that amounts contained herein that relate to Federal,
   state and local income taxes. Such subsidiary record categories shall be
   reported as required by part 43 of this Commission's Rules and Regulations.

§ 32.7300   Nonoperating income and expense.

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   This account shall be used to record the results of transactions, events and
   circumstances  affecting the company during a period and which are not
   operational in nature. This account shall include such items as nonoperating
   taxes,  dividend income and interest income. Whenever practicable, the
   inflows and outflows associated with a transaction or event shall be matched
   and the result shown as a net gain or loss. This account shall include the
   following:

   (a) Dividends on investments in common and preferred stock, which is the
   property of the company, whether such stock is owned by the company and held
   in its treasury, or deposited in trust including sinking or other funds, or
   otherwise controlled.

   (b) Dividends received and receivable from affiliated companies accounted
   for on the equity method shall be included in Account 1410, Other noncurrent
   assets, as a reduction of the carrying value of the investments.

   (c)  Interest  on  securities,  including notes and other evidences of
   indebtedness, which are the property of the company, whether such securities
   are owned by the company and held in its treasury, or deposited in trust
   including sinking or other funds, or otherwise controlled. It shall also
   include interest on cash bank balances, certificates of deposits, open
   accounts, and other analogous items.

   (d) For each month the applicable amount requisite to extinguish, during the
   interval  between  the  date  of acquisition and date of maturity, the
   difference between the purchase price and the par value of securities owned
   or held in sinking or other funds, the income from which is includable in
   this  account.  Amounts thus credited or charged shall be concurrently
   included in the accounts in which the securities are carried.

   (e) Amounts charged to the telecommunications plant under construction
   account  related to allowance for funds used during construction. (See
   §32.2000(c)(2)(x).)

   (f) Gains or losses resulting from:

   (1) The disposition of land or artworks;

   (2) The disposition of plant with traffic;

   (3) The disposition of nonoperating telecommunications plant not previously
   used in the provision of telecommunications services.

   (g)  All other items of income and gains or losses from activities not
   specifically provided for elsewhere, including representative items such as:

   (1) Fees collected in connection with the exchange of coupon bonds for
   registered bonds;

   (2) Gains or losses realized on the sale of temporary cash investments or
   marketable equity securities;

   (3)  Net unrealized losses on investments in current marketable equity
   securities;

   (4) Write-downs or write-offs of the book costs of investment in equity
   securities due to permanent impairment;

   (5) Gains or losses of nonoperating nature arising from foreign currency
   exchange or translation;

   (6) Gains or losses from the extinguishment of debt made to satisfy sinking
   fund requirements;

   (7) Amortization of goodwill;

   (8)  Company's share of the earnings or losses of affiliated companies
   accounted for on the equity method; and

   (9)  The  net  balance of the revenue from and the expenses (including
   depreciation, amortization and insurance) of property, plant, and equipment,
   the cost of which is includable in Account 2006, Nonoperating plant.

   (h)  Costs  that  are  typically given special regulatory scrutiny for
   ratemaking purposes. Unless specific justification to the contrary is given,
   such costs are presumed to be excluded from the costs of service in setting
   rates.

   (1) Lobbying includes expenditures for the purpose of influencing public
   opinion with respect to the election or appointment of public officials,
   referenda, legislation, or ordinances (either with respect to the possible
   adoption  of  new  referenda,  legislation or ordinances, or repeal or
   modification of existing referenda, legislation or ordinances) or approval,
   modification, or revocation of franchises, or for the purpose of influencing
   the decisions of public officials. This also includes advertising, gifts,
   honoraria,  and  political  contributions.  This does not include such
   expenditures  which  are  directly  related to communications with and
   appearances before regulatory or other governmental bodies in connection
   with the reporting utility's existing or proposed operations;

   (2) Contributions for charitable, social or community welfare purposes;

   (3) Membership fees and dues in social, service and recreational or athletic
   clubs and organizations;

   (4) Penalties and fines paid on account of violations of statutes. This
   account shall also include penalties and fines paid on account of violations
   of U.S. antitrust statutes, including judgements and payments in settlement
   of civil and criminal suits alleging such violations; and

   (5) Abandoned construction projects.

   (i) Cash discounts on bills for material purchased shall not be included in
   this account.

   [ 67 FR 5698 , Feb. 6, 2002]

§ 32.7400   Nonoperating taxes.

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   This account shall include taxes arising from activities which are not a
   part of the central operations of the entity.

   (a) This account shall be charged and Account 4330, Unamortized nonoperating
   investment tax credits—net, shall be credited with investment tax credits
   generated from qualified expenditures related to other operations which the
   company has elected to defer rather than recognize currently in income.

   (b) This account shall be credited and Account 4330 shall be charged with
   the amortization of each year's investment tax credits included in such
   accounts relating to amortization of previously deferred investment tax
   credits of other property or regulated property, the amortization of which
   does not serve to reduce costs of service (but the unamortized balance does
   reduce  rate base) for ratemaking purposes. Such amortization shall be
   determined with reference to the period of time used for computing book
   depreciation on the property with respect to which the tax credits relate.

   (c) This account shall be charged and Account 4070, Income taxes—accrued,
   shall be credited for the amount of nonoperating Federal income taxes and
   state and local income taxes for the current period. This account shall also
   reflect subsequent adjustments to amounts previously charged.

   (d) Taxes shall be accrued each month on an estimated basis and adjustments
   made as more current data becomes available.

   (e)  Companies  that  adopt  the flow-through method of accounting for
   investment tax credits shall reduce the calculated provision in this account
   by the entire amount of the credit realized during the year. Tax credits,
   other  than  investment  tax credits, if normalized, shall be recorded
   consistent with the accounting for investment tax credits.

   (f) No entries shall be made to this account to reflect interperiod tax
   allocation.

   (g)  Taxes  (both Federal and state) shall be accrued each month on an
   estimated basis and adjustments made as later data becomes available.

   (h) This account shall be charged and Account 4080, Other taxes—accrued,
   shall be credited for all nonoperating taxes, other than Federal, state and
   local income taxes, and payroll related taxes for the current period. Among
   the items includable in this account are property, gross receipts, franchise
   and  capital  stock  taxes. This account shall also reflect subsequent
   adjustments to amounts previously charged.

   (i) This account shall be charged or credited, as appropriate, with contra
   entries recorded to the following accounts for nonoperating tax expenses
   that has been deferred in accordance with §32.22: 4110 Net Current Deferred
   Nonoperating Income Taxes, 4350 Net Noncurrent Deferred Nonoperating Income
   Taxes.

   (j) Subsidiary record categories shall be maintained to distinguish between
   property and nonproperty related deferrals and so that the company may
   separately report the amounts contained herein that relate to Federal, state
   and local income taxes. Such subsidiary record categories shall be reported
   as required by part 43 of this chapter.

   [ 67 FR 5699 , Feb. 6, 2002]

§ 32.7500   Interest and related items.

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   (a) This account shall include the current accruals of interest on all
   classes of funded debt the principal of which is includable in Account 4200,
   Long term debt and funded debt. It shall also include the interest on funded
   debt the maturity of which has been extended by specific agreement. This
   account shall be kept so that the interest on each class of funded debt may
   be shown separately in the annual reports to this Commission.

   (b) These accounts shall not include charges for interest on funded debt
   issued or assumed by the company and held by or for it, whether pledged as
   collateral or held in its treasury, in special deposits or in sinking or
   other funds.

   (c) Interest expressly provided for and included in the face amount of
   securities issued shall be charged at the time of issuance to Account 1280,
   Prepayments, and cleared to this account as the term expires to which the
   interest applies.

   (d) This account shall also include monthly amortization of balances in
   Account 4200, Long-term debt and funded debt.

   (e) This account shall include the interest portion of each capital lease
   payment.

   (f) This account shall include the monthly amortization of the balances in
   Account 1410, Other noncurrent assets.

   (g) This account shall include all interest deductions not provided for
   elsewhere, e.g., discount, premium, and expense on notes maturing one year
   or less from date of issue.

   (h) A list of representative items of indebtedness, the interest on which is
   chargeable to this account, follows:

   (1) Advances from affiliated companies;

   (2) Advances from nonaffiliated companies and other liabilities;

   (3) Assessments for public improvements past due;

   (4) Bond coupons, matured and unpaid;

   (5) Claims and judgments;

   (6) Customers' deposits;

   (7) Funded debt mature, with respect to which a definite agreement as to
   extension has not been made;

   (8) Notes payable on demand or maturing one year or less from date of issue;

   (9) Open accounts;

   (10) Tax assessments, past due; and

   (11) Discount, premium, and issuance expense of notes maturing one year or
   less from date of issue.

   [ 67 FR 5699 , Feb. 6, 2002]

§ 32.7600   Extraordinary items.

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   (a)  This  account  is  intended to segregate the effects of events or
   transactions that are extraordinary. Extraordinary events and transactions
   are distinguished by both their unusual nature and by the infrequency of
   their occurrence, taking into account the environment in which the company
   operates. This account shall also include the related income tax effect of
   the extraordinary items.

   (b)  This  account  shall  be credited and/or charged with nontypical,
   noncustomary and infrequently recurring gains and/or losses which would
   significantly  distort  the current year's income computed before such
   extraordinary items, if reported other than as extraordinary items.

   (c) This account shall be charged or credited and Account 4070, Income
   taxes—accrued, shall be credited or charged for all current income tax
   effects (Federal, state and local) of extraordinary items.

   (d) This account shall also be charged or credited, as appropriate, with a
   contra amount recorded to Account 4350, Net noncurrent deferred nonoperating
   income taxes or Account 4110, Net current deferred nonoperating income taxes
   for the income tax effects (Federal, state and local) of extraordinary items
   that have been deferred in accordance with §32.22.

   [ 67 FR 5700 , Feb. 6, 2002]

§ 32.7899   Content of accounts.

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   Jurisdictional differences and nonregulated income amounts shall be included
   in Accounts 7910 and 7990.

§ 32.7910   Income effect of jurisdictional ratemaking differences—net.

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   This  account shall include the impact on revenues and expenses of the
   jurisdictional  ratemaking  practices  which  vary  from those of this
   Commission. All entries recorded in this account shall be recorded net of
   the applicable income tax effects and shall be supported by appropriate
   subsidiary records, where necessary, as provided for in §32.13(e) of subpart
   B.

§ 32.7990   Nonregulated net income.

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   (a) This account shall be used by those companies who offer nonregulated
   activities  that  do  not involve the joint or common use of assets or
   resources used in the provision of both regulated and nonregulated products
   and services, and which have not established a separate subsidiary for that
   purpose.

   (b)  All  revenue  and  expenses  (including  taxes) incurred in these
   nonregulated activities shall be recorded on separate books of account for
   such operations. Only the net of the total revenues and total expenses shall
   be  recorded in this account, with a contra debit or credit to account
   1406.3.

   [ 52 FR 6562 , Mar. 4, 1987]

Subpart G—Glossary

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§ 32.9000   Glossary of terms.

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   When used in this system of accounts:

   Accelerated depreciation means a depreciation method or period of time,
   including the treatment given cost of removal and gross salvage, used in
   calculating depreciation deductions on income tax returns which is different
   from the depreciation method or period of time prescribed by this Commission
   for use in calculating depreciation expense recorded in a company's books of
   account.

   Account means a specific element of a chart of accounts used to record,
   classify and accumulate similar financial transactions resulting from the
   operations  of the entity. “Accounts” or “these accounts” refer to the
   accounts of this system of accounts.

   Accounting system means the total set of interrelated principles, rules,
   requirements, definitions, accounts, records, procedures and mechanisms
   necessary to operate and evaluate the entity from a financial perspective.
   An accounting system generally consists of a chart of accounts, various
   parallel subsystems and subsidiary records. An accounting system is utilized
   to provide the necessary financial information to users to meet judiciary
   and other responsibilities.

   Affiliated companies means companies that directly or indirectly through one
   or more intermediaries, control or are controlled by, or are under common
   control with, the accounting company. See also Control.

   Amortization means the systematic recoveries, through ratable charges to
   expense, of the cost of assets.

   Associated equipment means that equipment which functions with a specific
   type  of plant or with two (2) or more types of plant, e.g., switching
   equipment,  network power equipment, circuit equipment, common channel
   network signaling equipment or network operations equipment. Associated
   equipment shall be classified to the account appropriate for the type of
   equipment  with  which it is predominately used rather than on its own
   characteristics.

   Illustrative examples of associated equipment are:

   Alarm and signal apparatus

   Auxiliary framing

   Cable and cable racks

   Distributing frames and equipment thereon

   Frame  and  aisle  lighting equipment (not permanently attached to the
   building)

   Relay racks and panels

   Basic service area means the minimum specified calling area for which a
   tariff is prescribed.

   Book cost means the amount at which property is recorded in these accounts,
   without deduction of related allowances.

   Common carrier or carrier means any person engaged as a common carrier for
   hire,  in  interstate  or foreign communication by wire or radio or in
   interstate or foreign radio transmission of energy, except where reference
   is made to common carriers not subject to this Act; but a person engaged in
   radio broadcasting shall not, insofar as such person is so engaged, be
   deemed a common carrier.

   Company or the company, when not otherwise indicated in the context, means
   the accounting entity. It includes such unincorporated entities which may be
   subject to the Communications Act of 1934, as amended.

   Control (including the terms “controlling,” “controlled by,” and “under
   common control with”) means the possession directly or indirectly, of the
   power to direct or cause the direction of the management and policies of a
   company, whether such power is exercised through one or more intermediary
   companies, or alone, or in conjunction with, or pursuant to an agreement
   with, one or more other companies, and whether such power is established
   through a majority or minority ownership or voting of securities, common
   directors,  officers,  or stockholders, voting trusts, holding trusts,
   affiliated companies, contract, or any other direct or indirect means.

   Cost , except as applied to telecommunications plants, franchises, and
   patent rights, means the amount of money actually paid (or the current money
   value of any consideration other than money exchanged) for property or
   services. See also Original Cost.

   Cost  of removal means the cost of demolishing, dismantling, removing,
   tearing  down,  or otherwise disposing of telecommunications plant and
   recovering the salvage, including the cost of transportation and handling
   incident thereto.

   Depreciation means the loss not restored by current maintenance, incurred in
   connection   with   the   consumption  or  prospective  retirement  of
   telecommunications plant in the course of service from causes which are
   known to be in current operation, against which the company is not protected
   by insurance, and the effect of which can be forecast with a reasonable
   approach to accuracy. Among the causes to be given consideration are wear
   and tear, decay, action of the elements, inadequacy, obsolescence, changes
   in technology, changes in demand and requirements of public authorities.

   Entity means a legal enterprise (common carrier) engaged in interstate
   communications within the meaning of the Communications Act of 1934, as
   amended.

   Group plan, as applied to depreciation accounting, means the plan under
   which depreciation charges are accrued upon the basis of the original cost
   of  all property included in each depreciable plant account, using the
   average service life thereof properly weighted, and upon the retirement of
   any depreciable property its cost is charged to the depreciation reserve
   whether or not the particular item has attained the average service life.

   Indexed revenue threshold for a given year means $100 million, adjusted for
   inflation, as measured by the Department of Commerce Gross Domestic Product
   Chain-type Price Index (GDP-CPI), for the period from October 19, 1992 to
   the given year. The indexed revenue threshold for a given year shall be
   determined by multiplying $100 million by the ratio of the annual value of
   the GDP-CPI for the given year to the estimated seasonally adjusted GDP-CPI
   on October 19, 1992. The indexed revenue threshold shall be rounded to the
   nearest $1 million. The seasonally adjusted GDP-CPI on October 19, 1992 is
   determined to be 100.69.

   Intangible property means assets that have no physical existence but instead
   have value because of the rights which ownership confers.

   Intrasystems means assets consisting of:

   (1)  PBX  and  Key System Common Equipment (a switchboard or switching
   equipment shared by all stations);

   (2) Associated CPE station equipment (usually telephone or Key Telephone
   Systems); and

   (3) Intrasystem wiring (all cable or wiring and associated components which
   connect the common equipment and the station equipment, located on the
   customer's side of the demarcation point).

   An intrasystem does not include property, plant or equipment which are not
   solely dedicated to its operation.

   Mid-sized incumbent local exchange carrier is a carrier whose annual revenue
   from regulated telecommunications operations equals or exceeds the indexed
   revenue threshold and whose revenue when aggregated with the revenues of any
   local exchange carrier that it controls, is controlled by, or with which it
   is under common control is less than $7 billion (indexed for inflation as
   measured by the Department of Commerce Gross Domestic Product Chain-type
   Price Index (GDP-CPI)).

   Minor items, as applied to depreciable telecommunications plant, means any
   part  or  element  of such plant, which when removed, (with or without
   replacement) does not initiate retirement accounting.

   Original cost or cost , as applied to telecommunications plant, rights of
   way and other intangible property, means the actual money cost of (or the
   current money value of any consideration other than money exchanged for)
   property at the time when it was first dedicated to use by a regulated
   telecommunications  entity,  whether  the  accounting  company  or  by
   predecessors.

   For  the  application  of  this  definition  to property acquired from
   predecessors see §32.2000(b)(1) of subpart C. Note also the definition of
   Cost in this section.

   Plant  retired  means  plant  which has been removed, sold, abandoned,
   destroyed, or otherwise withdrawn from service.

   Retirement units , as applied to depreciable telecommunications plant, means
   those items of plant which when removed (with or without replacement) cause
   the initiation of retirement accounting entries.

   Salvage value means the amount received for property retired, if sold, or if
   retained for reuse, the amount at which the material recovered is chargeable
   to Account 1220, Material and Supplies, or other appropriate account.

   Straight-line method , as applied to depreciation accounting, means the plan
   under  which the cost of property is charged to operating expenses and
   credited to accumulated depreciation through equal annual charges as nearly
   as may be during its service life.

   Subsidiary  record means accumulation of detailed information which is
   required by this Commission to be maintained in support of entries to the
   accounts.

   Subsidiary record categories means those segregations of certain regulated
   costs, expenses and revenues which must be maintained and are subject to
   specific reporting requirements of this Commission.

   Subsystems, parallel mechanisms means processes or procedures which augment
   the use of a chart of accounts in the financial operation of the entity.
   These subsystems operate on and/or process account and subsidiary record
   information for specific purposes.

   Telecommunications means any transmission, emission, or reception of signs,
   signals, writing, images or sounds or intelligence of any nature by wire,
   radio,  visual  or other electromagnetic systems. This encompasses the
   aggregate of several modes of conveying information, signals or messages
   over  a  distance.  Included in the telecommunications industry is the
   transmitting,  receiving,  or exchanging of information among multiple
   locations. The minimum elements required for the telecommunications process
   to occur are a message source, a transmission medium and a receiver.

   Time of installation means the date at which telecommunications plant is
   placed in service.

   Time of retirement means the date at which telecommunications plant is
   retired from service.

   Tangible property means assets characterized by physical existence, such as
   land, buildings, equipment, furniture, fixtures and tools.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  61 FR 50245 , Sept. 25, 1996;  62 FR 39778 , July 24, 1997;  62 FR 51064 , Sept. 30, 1997;  64 FR 50008 , Sept. 15,
   1999;  67 FR 5700 , Feb. 6, 2002]
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